There are still three weeks left to find out how much your future Social security audits will be. There have been constant discussions all year, and we are getting closer to the final amount. As a welfare recipient, you will find that the amount of information about how welfare checks will change next year is steadily increasing. Knowing what the adjustment will be will not only tell you how much you can increase your spending, but also how it will affect your purchasing power. Read on for the latest update on this topic.
Why do we need to update our Social Security checks?
The simple answer is that it is crucial to mitigate the impact of inflation on your income, and the easiest way to do that is to change your Social Security checks. To understand this theory, consider that the economy as a whole is a system of various linkages and dependencies that interact and affect price changes. The more uncertainties and external variables that disrupt the normal functioning of the economy, the more prices fluctuate. In most cases, they rise, thus limiting the amount of money you can spend. This is known as Purchasing power of your money.
Put yourself in the shoes of a retiree or a recipient of Social Security checks. Most likely, your main source of income is the monthly check you receive from the Social Security Administration. As a result, you have no direct control over the amount you receive and any price changes are your responsibility. As a result, the number of things you normally buy may be reduced and some important services, such as medical care, may be eliminated.
Therefore, since 1975, the Social Security Administration has updated the amount of Social Security checks using an internal calculation known as Cost of Living Adjustment (COLA). The COLA is an index constructed by selecting data from the third quarter (July, August and September) of the CPI-W (also known as the Consumer Price Index for Urban Wage Earners and Clerical Workers), averaging them, and comparing the change from the previous year.
The CPI-W was chosen because it tracks price changes for more than 200 products and weights them based on the consumption preferences of families with at least one wage earner or employee. This helps fine-tune price increases for goods and services that are more relevant to actual recipients. Social security auditsHowever, this strategy has been widely questioned as family tastes may not fully align with the purchasing habits of older people and consumption patterns change along with spending considerations.
By how much is the number of Social Security checks expected to increase?
All eyes are on the Bureau of Labor Statistics (BLS) between now and October 10, as September’s CPI-W is the last piece of data needed to calculate this year’s COLA. That’s when it will be released, and not long after that, the SSA should release next year’s cost-of-living adjustment. Right now, with inflation easing, the projected amount is deviating from 8% in 2022, and the Senior Citizens League (TSCL), a group that monitors all issues affecting retirees, predicts it will be around 2.6%.
This new cost of living increase will not only affect your Social Security checks, but also Medicare Part B Premiums and other values linked to eligibility requirements. For example, the income and asset requirements for applying for the Supplemental Security Income (SSI) program or the amount per Social Security credit you can contribute with your Social Security taxes.
