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Social Security Raise Has Recipients Coming Out Ahead Of Inflation

By Mike Zaccardi, CFA, CMTMarket OverviewOct 20, 2021 05:21AM ET
www.investing.com/analysis/social-security-raise-has-recipients-coming-out-ahead-of-inflation-200605649
Social Security Raise Has Recipients Coming Out Ahead Of Inflation
By Mike Zaccardi, CFA, CMT   |  Oct 20, 2021 05:21AM ET
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This article was originally published at the Humble Dollar.

Last week's news that Social Security recipients will receive a 5.9% cost-of-living adjustment for 2022 might seem like a nonevent. After all, those larger monthly checks will be fully devoured by today’s higher prices.

Or maybe not.

September’s report for the Consumer Price Index (CPI) showed that inflation for medical care services—a big cost for retirees—was quite tame over the past 12 months, rising less than 1%. Seniors also spend significantly less on transportation, so they’re less harmed by the past year’s 15% surge in the cost of new and used cars and trucks, as well as motor vehicle parts.

On the downside, younger retirees—or, at least, those willing to travel during the pandemic—have likely felt the brunt of the 18% jump in the cost of “lodging away from home.” One plus for travelers: A strong U.S. dollar has made overseas excursions less pricey. Those in their 60s usually travel more, while those ages 75 and up tend to spend a higher amount on health care.

Next year may be kinder to all consumers. According to Bank of America analysts, core CPI—which excludes volatile food and energy items—will rise 4.3% in 2021 and 3.1% in 2022. The Federal Reserve, which looks at a somewhat different inflation measure, expects core inflation to be even lower.

What does all this mean? Arguably, those receiving Social Security checks are getting a pretty good deal. They’re receiving a 5.9% raise, while their cost of living appears to be climbing at a slower rate.

Social Security Raise Has Recipients Coming Out Ahead Of Inflation
 

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Social Security Raise Has Recipients Coming Out Ahead Of Inflation

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Comments (4)
Stephen Slattery
Stephen Slattery Oct 22, 2021 7:01PM ET
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This humble jump follows a turbulent year when our SS seniors received an anemic 1.2% increase for 2021. We have been paying higher prices all year. Doesn't begin to cover these additional expenses. If you think we're in as good place take a 5 minute walk in our shoes.
Kevin Avila
Kevin Avila Oct 22, 2021 2:53PM ET
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Im not sure you did your research…
Gervais Christopher
Gervais Christopher Oct 22, 2021 8:47AM ET
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Inflation rate / per QUARTER has been running above 5%. EVERY QUARTER! There are 4 quarters per year. So the inflation rate for the year equals 20+%. How does 5.9% Social Security raise FOR THE YEAR equal 20+%??? You financial guys are liars and crooks that tell everyone they are getting a good thing when you are actually taking three quarters for yourselves. We KNOW better.
Emmett Denham
Emmett Denham Oct 22, 2021 7:37AM ET
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Are you serious? Heating cost this winter? Food prices? Gas prices? Everything cost more? Take a walk around.
 
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