(PatriotWise.com)- Every year, the federal government calculates what’s called a COLA, or cost-of-living adjustment, for recipients of federal benefits such as Social Security.
It’s designed to help offset the increased cost of living from year to year so that recipients are able to afford to pay for the things they need every day. This year, the Social Security administration gave out its highest COLA ever, yet it was still not enough to outpace historic inflation.
In early May, the Senior Citizens League said they expect COLA payments to increase by 8.6% over the next year, which would mark the largest such increase since back in 1981. People who are receiving Social Security benefits, though, may not see that as enough to cover the cost of gas, food and other necessities as prices on just about everything continue to skyrocket.
People who are eligible for the COLA payments include anyone who is 62 years old and older who has been retired for at least five years, or any 55 years old and older who has been retired for at least 10 years.
Disability retirees who have been retired for at least five years or spouses of a deceased retiree who is receiving lifetime Social Security benefits are also eligible for the COLA payments.
The COLA payments are made automatically and adjusted to the normal monthly payments by the federal government.
In most years, the COLA is sufficient to cover the natural increased cost of goods from one year to the next. But, with inflation out of control, it’s not coming close to compensating.
What’s more, the COLA payments take a while to take effect. For example, even if COLA payments were to increase by 8% or more for next year, it wouldn’t take effect for another seven months. That would result in the roughly 70 million people who receive Social Security benefits would have to ride out the storm for quite a bit longer while they wait for their additional payments to kick in.
There are those in the field who also doubt that the COLA from this year will be enough for recipients of Social Security to cover their increased cost of living. One of those people is Wealth Enhancement Group’s senior vice president, Peter Anastasian, who said recently:
“The increase in Medicare premiums increased substantially as well, offsetting a large part of the Social Security increase.”
While the COLA was a record high for this year, it paled in comparison to the more than 10% increase year-over-year of basic necessities seniors need to live, he said.
The Social Security Administration set the COLA at 5.9% for this year last October. Clearly, though, that wasn’t enough. Inflation started skyrocketing out of control earlier this year, and quickly surpassed the COLA in terms of percentages.
So, while any increase in payments is certainly a welcome thing from Social Security recipients, the federal government also clearly isn’t doing enough to help these people afford their day-to-day expenses.