If you receive Social Security or Social Security Disability payments, you probably know that you receive annual increases based on inflation. While this helps you meet the rising costs of everything from food to medical expenses, it might not enable you to fully retain your standard of living.
Some facts on Social Security and inflation could lead to a better understanding of how this equation works.
A solid increase in 2023
Information from CNBC brings attention to the 8.7% increase 65 million Social Security beneficiaries received in January. Even so, as inflation remains at high levels, beneficiaries might still see a decrease in buying power.
One analysis indicates those with SS benefits fell about $1,054 short in the past two years. That is because the rate of inflation does not always fall in line with the increase from the Social Security Administration.
In some years, recipients gain buying power, and in other years they lose buying power, depending upon a complicated mix of factors. The result is that in recent years, the inflation adjustments for SS recipients have not necessarily kept pace with inflation.
A complicated issue
The SSA uses an inflation measurement based on the Consumer Price Index for Urban Wage Earners and Clerical Workers. This information determines the yearly cost of living adjustment or COLA.
However, your rate of inflation might not match this method. Some economists recommend another method to more accurately reflect increased annual expenses, but so far, the SSA has not made any changes.
It always pays to get the most out of your benefits. This could help you retain your standard of living even during high inflation.
