Jump to content

United States Social Security benefits could get the biggest increase since 1983


Recommended Posts

https://money.yahoo.com/social-security-benefits-could-get-biggest-increase-since-1983-211702221.html

Senior citizens and disabled workers could be looking at the biggest boost to their Social Security benefits in decades next year — thanks to hot inflation now.

Beneficiaries could see their benefits increase by 5.8% in January 2022, according to a Bank of America analyst note, which would be the biggest boost since 1983. That’s also quite a bit more than January 2021’s increase of 1.3% to the cost-of-living adjustment or COLA that hasn’t been enough to keep up with this year’s inflation.

In June, the Bureau of Labor Statistics’ Consumer Price Index (CPI) — a key gauge of inflation — shot up to 5.4% from the previous year, marking the largest spike since August 2008. Some of the largest price increases were related to travel and cars, along with everyday items like laundry machines, bacon, fruit, and milk.

This has important implications for both retirees and disabled workers getting Social Security and SSI benefits,” the note stated. “It means their budgets are being squeezed now, but improve a lot next year.”


That hike would translate to more than an additional $80 per month in benefits — a fourfold increase than the extra $20 beneficiaries saw in the monthly benefits this year, per Bank of America.

With more Social Security dollars to dole out next year — and inflation in 2022 expected to ease to 2.3% — there will be about a “$80 billion or so swing” in net tax benefits that will help sustain the recovery into next year, according to the Bank of America analysts.

Read more: 4 Social Security tips to plan your retirement

“Seniors and the disabled will be doing their share in keeping the economy hot,” the note said.

The final say on the benefit increase rests with the Social Security Administration, which still has three additional months of data to collect before the official COLA percentage is determined.

COLA is measured by data fluctuations in the CPI, specifically those categorized as urban wage earners and clerical workers. A comparison is made in October using the CPI snapshot of the previous year’s third quarter and the current year’s third-quarter data; the change in growth, if any, determines the adjustment.

Edited by Jollygoodfellow
Added full story as per rules
  • Like 3
Link to comment
Share on other sites

I've heard people talk of an invisible inflation of up to 2% a year that is baseline, the published inflation rate is above and beyond that. The published inflation rate is pure blue sky dreaming at the moment IHMO. Fuel prices have risen 50% in the US and most things you have, spent some time on a truck. I suspect higher inflation for the coming year from today and I'm acting to mitigate it for my personal situation. Best of luck everyone.

Edited by robert k
  • Like 1
Link to comment
Share on other sites

  • Forum Support
12 minutes ago, robert k said:

Fuel prices have risen 50% in the US and most things you have, spent some time on a truck.

I worked for a trucking company for 30+ years.  We used to say "if you bought it, a truck brought it".  Approximately 20 years ago carriers had to start adding a fuel surcharge to their invoices to cover the rapidly rising cost of fuel.  Every week we would get the "West Coast Average" and use it to calculate what percentage would be added to the invoice.  The surcharge was expected by both carriers and customers to be a "temporary" line item until fuel prices became stable and new rates could be established.  That never happened and the fuel surcharge is now standard.   The fuel surcharge on a per mile basis typically added one penny per mile for each six cent rise in the price of diesel over an agreed upon base diesel price.   The "base price" was always set fairly low because neither carrier nor customer really wanted to see a negative fuel surcharge.

Example: Base price of fuel set at 2.00 per gallon.  Actual price is 3.60.  Length of haul is 600 miles. 

Fuel surcharge = (3.60 - 2.00)/6 * 600 = $160.00 in addition to the base charge and any other assessorial charges.  While $160 per load is a fairly substantial increase to the freight charges, the impact on the final cost to the consumer is relatively small when spread over the typical quantity of freight being hauled.  A case of beer for example weights about 40 pounds.  So we get 1200 cases of beer on the truck and the fuel surcharge on a per case basis would be about 13 cents.  :7500:

And that is todays lesson on how many trucking companies calculate their fuel surcharge.   Probably more than you wanted or needed to know. 

  • Like 3
Link to comment
Share on other sites

  • Forum Support
3 hours ago, robert k said:

The base price of fuel has risen. 

I am not surprised, I have been retired for eight years now.  I still miss the people I worked with in the office and also the drivers.  The drivers in particular were hard workers and what used to be referred to as "salt of the earth" people.

My apologies to the group for drifting a bit off topic. 

Link to comment
Share on other sites

There is a bill in Congress to change the COLA to use CPI-E (Elderly) instead of CP!-W.

Screenshot (344).png

  • Like 1
Link to comment
Share on other sites

3 hours ago, OnMyWay said:

There is a bill in Congress to change the COLA to use CPI-E (Elderly) instead of CP!-W.

Screenshot (344).png

Since the feds implemented the automatic COLA increases based on the CPI there are some who think the feds have manipulated how the CPI is calculated to reduce the COLA to reduce the overall federal budget increase from year to year.

https://www.investopedia.com/articles/07/consumerpriceindex.asp

http://www.shadowstats.com/inflation_calculator

My house which I purchased almost 2 years ago has an estimated value which has gone up by 27% since we bought it. This is a great deal more than what would be attributed to the increased cost of lumber. For those who don't know over the last year the price of lumber for construction in the US has gone up 4X. It is starting to come back down a bit. This was a supply/demand effect related to covid.

Even with COLA inflation is going to make the money pensioners have less valuable. Because IMHO the COLA will not keep up with the true cost of things. Plus some pensions don't have COLA. Finally with much higher inflation and low interest rates you are losing money if you keep your savings in cash, you must invest somewhere to try and get a return better than inflation, but with all the money the government is handing out, everything is in a huge bubble which could burst wiping you out.

I feel fortunate that at this time my monthly income is enough for our day to day needs without having to withdraw from my IRA's but if inflation runs hot it may not be too long before I have to start taking monthly distributions from my IRA's.

Makes me feel a bit like a chicken running around in circles shouting the sky is falling.

 

  • Like 2
Link to comment
Share on other sites

13 hours ago, earthdome said:

My house which I purchased almost 2 years ago has an estimated value which has gone up by 27% since we bought it. This is a great deal more than what would be attributed to the increased cost of lumber. For those who don't know over the last year the price of lumber for construction in the US has gone up 4X. It is starting to come back down a bit. This was a supply/demand effect related to covid.

I have been following a guy who I think has good data and makes a lot of sense.  He has a knack for making all the numbers make sense, and I don't get the sense that he has a heavy bias.

The video below is about lumber and then housing.  If you like it, he has a new one about inflation and some great ones about the housing market.

My bet is that his predictions are more accurate than all the people who have a vested interest in promoting that the real estate market will go up forever.  I made that mistake once before.  I bought a house in Florida in 2003 for 198k.  In 2006 I took a job in Germany and had to decide to sell or rent the house.  The value had gone up to 380k in 3 years!  I made the mistake of thinking it would appreciate forever, so I rented it.  You know what happened after that.  Sometime between 2008 and 2012, the value went down to about 190k at the low!  Luckily I kept good renters in it for the years that followed, and in 2020 it had recovered and I sold it for a great price last year.  Now, Zillow says in one year exactly, it is worth 50K more than my sales price!  That is another ridiculous bubble price and if someone were to pay that price for that house now, they will feel burned soon.  I'm 99% sure of that.

I hope to buy in Texas next year, but if the bubble has not burst yet, I will be a renter until it does.

 

  • Like 3
Link to comment
Share on other sites

3 hours ago, OnMyWay said:

I have been following a guy who I think has good data and makes a lot of sense.  He has a knack for making all the numbers make sense, and I don't get the sense that he has a heavy bias.

The video below is about lumber and then housing.  If you like it, he has a new one about inflation and some great ones about the housing market.

My bet is that his predictions are more accurate than all the people who have a vested interest in promoting that the real estate market will go up forever.  I made that mistake once before.  I bought a house in Florida in 2003 for 198k.  In 2006 I took a job in Germany and had to decide to sell or rent the house.  The value had gone up to 380k in 3 years!  I made the mistake of thinking it would appreciate forever, so I rented it.  You know what happened after that.  Sometime between 2008 and 2012, the value went down to about 190k at the low!  Luckily I kept good renters in it for the years that followed, and in 2020 it had recovered and I sold it for a great price last year.  Now, Zillow says in one year exactly, it is worth 50K more than my sales price!  That is another ridiculous bubble price and if someone were to pay that price for that house now, they will feel burned soon.  I'm 99% sure of that.

I hope to buy in Texas next year, but if the bubble has not burst yet, I will be a renter until it does.

 

The other thing to consider is if the housing market bubble bursts it will likely be due to the federal reserve letting interest rates rise. So if after the crash you don't need to borrow much for the house you make out. But if you get the house at a lower price but you need a mortgage and interest rates have risen it may not make much difference.

If you have liquid assets and don't have to borrow much then you are in the drivers seat.

We are thinking of relocating to a different state and are considering selling our current home while prices are up then rent at the new area we want to live and wait to see what happens while trying to put the extra cash from the sale to work.

  • Like 2
Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...