2021 Inflation will Mean Higher 2022 Social Security Checks

When it comes to prognostications, economists frequently seem either behind or chasing the power curve. Their prediction for April 2021 was an inflation rise of 3.6% They missed the mark. The Consumer Price index was 4.2%, the biggest increase since 2008.

Why such an acceleration? The biggest reason was that one year ago the economy was brought to its knees when the worst of the pandemic hit.

The Fed’s take on that worrisome inflation rise? Don’t worry, they say. The current rise is temporary and not likely to influence future policy. The Covid effect, they claim, was a distorting blip. Economists and Federal Reserve policy makers say the 4.2% rise will eventually settle down to around a 2% range, well within the comfort range of the central bank.

In the meantime, President Joe Biden and his advisors are struggling with rising energy prices and a nearly 50% increase in the cost of gasoline and higher fuel oil costs (37.3%). Likewise, the recent cyberattack on the Colonial Pipeline highlighted troublesome weaknesses in the security of the nation’s infrastructure.

What does all that mean for seniors struggling to get by in an economy where they are disproportionately affected by inflation?

Cost-of-living adjustments are tied to changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W measures the prices of what working wage earners pay for groceries and services that the average consumer buys. Those goods, however, are different from older Americans, who, for example, pay more of their income for medical services.

Another anomaly in the CPI-W is that the Covid-19 quarantine skewed buying habits of home-bound consumers, driving food costs up and nearly wrecking the restaurant business.

The Social Security Administration also has an experimental index, which measures inflation on goods bought by the elderly. The Consumer Price Index for the Elderly (CPI-E) isn’t currently used, but the calculation is that the CPI-E increases faster than the CPI-W annually by 0.2%. It’s not a big jump, but over 20 years it could mean a 4% higher aggregate benefit—that is if Social Security is still around in 20 years.

Social Security benefits beginning in January 2022 will be tied to the index of the third quarter of 2020 through September 2021. That increase in the index will be the 4.2% monthly inflation figure released by the government.

Retired people also face another hit affecting their Social Security benefits. Most recipients pay for Medicare out of their benefit checks. Inflation adjustments in Medicare premiums will be further subtracted because of increased costs of the Medicare program.

Given the fact that since September 2020 prices in everything have gone up by nearly 2% — but the predicted Social Security inflation adjustment was only 1.3% — we could be looking at the largest increase in 10 years. Some predictions are that the rise in inflation could be higher as the summer economy gets into high gear.

Still, anyone who relies totally on their Social Security check, if the increase in benefits is about 2%, will have to get by on an average monthly benefit payment of about $1,572.


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5 thoughts on “2021 Inflation will Mean Higher 2022 Social Security Checks”

  1. The two greatest expenses are food and fuel . Of which , none are counted when figuring the cost of living

    1. They should get the same benefits as the PEOPLE that pay them- and YES Social Security needs that as part of a REFORM!! People pay into Social Security and Congress OWES The USA for STEALING Social Security monies in the past!!!! Increases payments INTO and out of Social Security!!! Eliminate any that don’t pay into the system the required amount of time and $$!! Put people to WORK and stop the welfare socialists!! and yes I’m including the politicians that have put themselves on the GRAVY TRAIN FOR LIFE!!

  2. Social Security was audited in 2019 I believe and a trillion dollars extra was found 165 congressional people took the money out of social security and put it who knows where if it had been left in social security we would be able to give decent raises to people on Social Security and not wonder what might have to be done to keep the money going. I am willing to bet the 165 congressional people were DemocRATS and the money went to illegal immigrants. Not to the people and companies that paid into it so that the legal working citizens would have some money when they got old not to a bunch of people who didn’t work to put money into the fund and came here illegally to soak up money from hardworking legal Americans because they are two lazy to work both in their own countries and even here.

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