Will Social Security's Inflation Bump Hit Double Digits Next Year?

Probably not, but we won’t know for certain until October. The upcoming Cost of Living Adjustment (COLA) for Social Security will be based on the average of the July, August, and September Consumer Price Index (CPI-W) rates. As of July, the CPI-W was at 9.1, a slight decrease from 9.8 in June. The numbers that are most frequently discussed in the media are based on the CPI-U rate, which was 8.5 in July. The August numbers will be released on September 13, providing the most up-to-date data for our calculations.

Estimates for the CPI-U are projected to remain around 8.5 for the next couple of months. As for the CPI-W, the trend has shown a slight downtick, making it plausible to expect a COLA in the neighborhood of 9.1 to 9.2. Prices at the pump have seen some downward adjustments, suggesting that unless there is a significant upward swing in gas prices, we are unlikely to see the CPI-W surpass 10. However, forecasting future economic conditions remains inherently uncertain, and I could be mistaken.

Tackling Social Security: In and Out Take

There are primarily two ways to address the Social Security system: the in-take and the out-take. The in-take involves the federal government potentially increasing the amount that contributors must pay into Social Security and raising the retirement age. This issue is unlikely to be brought up in the 2022 election year when the focus will be on other pressing topics.

The out-take concerns the mandated cost of living adjustments. By law, these adjustments ensure that retirees and seniors see at least a 5.4% increase in their benefits for the upcoming year. The specific rate will depend on the Consumer Price Index (CPI-W) over the coming months, which is expected to hover around 8.5.

Depending on which political party is in control next year, one side might use the issue of Social Security’s funding shortfall as an attack on the other party. In the current political landscape, this is a highly likely scenario as each party may try to capitalize on any weaknesses in the other’s ideological stance on the Social Security system.

Long-Term Considerations

It’s also crucial to monitor the economic conditions during a potential recession. The length and depth of a recession can significantly affect inflation rates and other economic indicators. Historically, recessions have often led to higher inflation due to supply chain disruptions and demand shifts. If the recession is severe, it is possible that inflation could hit double digits by election day, and this scenario should not be ignored.

For the sake of our economy and nation, we must remain vigilant. Each vote carries significant weight in shaping the future trajectory of Social Security and other critical programs. Remember to stay informed and engaged in the political process, especially as we approach the 2022 elections. WAKE UP AMERICA.