There’s a reason seniors on Social Security are entitled to annual cost-of-living adjustments, or COLAs. Without those raises, their buying power would erode to an extreme degree in the course of retirement due to inflation.
The problem with COLAs, though, is that they’ve historically done a poor job of helping seniors stay afloat financially in light of inflation. This holds true even when COLAs are fairly generous.
Such is the case this year. Seniors on Social Security were privy to a 5.9% COLA for 2022 – the most generous raise the program had dished out in decades. In spite of that, they’re already losing buying power in a very big way.
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Even a larger COLA can’t keep up
Many seniors were happy to learn that their benefits would be rising by 5.9% in 2022. But so far, that raise is falling short.
In January, the Consumer Price Index was up 7.5% on an annual basis. And while we don’t have February’s data yet, we can expect to see a comparable level of inflation one those numbers come in.
As such, the 5.9% raise seniors got to kick off the year just isn’t cutting it. And so many retirees are no doubt struggling financially these days in the face of rising living costs – particularly those who get most or, worse yet, all of their income from Social Security.
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