CHARLESTON, S.C. (WCSC) - Starting in January, those receiving Social Security checks will see a major boost in the amount of money hitting their accounts. The Social Security Administration estimates the average retired worker will receive about $92 more a month.
At 5.9%, the cost-of-living adjustment is the largest increases to Social Security benefits since 1982 when the COLA was 7.4%.
The increase is based on the increase in the Consumer Price Index from the third quarter of 2020 through the third quarter of 2021.
“We’ve had the biggest jump in inflation in 40 years this past year,” said David Monckton with Carolinas Wealth Management. “Your rate of inflation is dependent on what you spend your money on. Invariably, the individual that is a retiree spent more money on energy and health care. Historically, those areas have inflated more than whatever Social Security has gone up.”
The latest numbers from the Bureau of Labor Statistics shows inflation climbed another 0.8% in November to top 6.8% over the last 12 months. Energy has seen one of the largest increases at more than 33% according to the BLS.
“Even though there’s Social Security is going to go up roughly $92 a month, based on some of the earlier projections, about half of that would go toward paying higher calls for Medicare Part B,” Monckton said. “Social Security has just never kept up with the real rate of inflation, which is why inflation is such a concern.”
Monckton says the best strategy for preparing for retirement is still to have a long-term plan and to save what you need for the future in an account that grows with inflation like a Roth IRA.
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