Higher Inflation Means Recipients To see Highest COLA in 40 years
Social Security benefits are pegged to the Consumer Price Index and are adjusted annually based on the overall change in prices as measured by that statistic. This year inflation has been much higher than at any time since the bad old days of the 70s and 80s. As a result, it looks as if Social Security benefits will be going up by a whopping 5.9% this year.
Sounds great if you collect Social Security, but it won't feel much different. The price of all kinds of goods and services have been increasing as well, and will quickly eat up that increase. We can all see it - gas, food, cars, housing and rents - all have been pushing relentlessly higher.
The so-called experts have been telling us for months now not to worry - that this is all temporary. I guess that depends on your definition of temporary. It looks as if the production supply constraints, microchip shortages, and shipping bottlenecks will be continuing well into next year - and as long as goods are in short supply, there will be continued upward pressure on prices. On top of that, the government is aiming to start spreading around a lot more money. That could further boost demand for goods when there simply aren't enough goods to go around.
In short - get used to higher prices. While we may not be in a self perpetuating wage/price spiral such as we experienced 45 years ago, it does feel as if this will be with us for some time. .