The majority of older customers are unconvinced that the 8.7% Social Security COLA for 2023 will maintain pace with inflation this year, according to a study conducted by the Senior Citizens League. Even if the inflation rate is heading downward, most seniors continue to be anxious that their Social Security cost-of-living adjustment will not keep up with growing costs.
Tuesday’s CPI data indicated ongoing progress toward a lower year-over-year inflation rate, with the headline figure falling from a cycle high of 8.9% in June to 6.4% in January. This January inflation rate is the lowest 12-month increase since October 2021.
54% of older customers remain unconvinced that the 8.7% Social Security cost-of-living increase for 2023 will keep up with inflation this year, according to a study conducted by the Senior Citizens League released on Tuesday. A similar proportion of respondents said that their household expenditures increased by more than the 5.9% rise in benefits from the COLA that year.
According to the Senior Citizens League, inflation in January, as assessed by the consumer price index for urban wage earners and clerical employees, or CPI-W — the same index used to compute the COLA — has slowed to 6.3% compared to the same month last year.
Seniors appreciated the recent COLA of Social Security payments amid fast-rising inflation, but it is evident that many feel the adjustment was inadequate, said Nina Lloyd, president and chief executive officer of Opus Financial Advisers, a division of Advisor Group. It is essential to remember that Social Security was never meant to be the primary source of retirement income. People should not rely solely on Social Security to cover their retirement demands. It is imperative to plan, save, and invest during your work to support your desired retirement, Lloyd noted. There are no quick fixes.
Overwhelmingly, 96% of poll respondents do not believe that 2023 will be the year elderly citizens catch up with inflation. Mary Johnson, the Senior Citizens League’s Social Security and Medicare policy expert, explains that in the three years between the beginning of the Covid-19 epidemic in 2020 and December 2022, despite yearly cost-of-living increases, Social Security payouts have fallen short by an average of $1,054.
Options such as annuities might supplement retirement income for people afraid their Social Security payments may not keep pace with inflation. According to KaNoi Lam, a financial adviser at KWM Wealth Advisory at Stifel Independent Advisors LLC, adding an annuity might lower a portfolio’s volatility and offer growth to hedge against inflation.
51% of poll respondents are concerned they would pay more in taxes this year due to the 5.9% COLA they received in 2022. And almost one in five are concerned that they may be taxed on their Social Security payments for the first time this tax season.
Politically speaking, 62% of respondents believe that Congress should preserve Social Security and Medicare benefits from delays or automatic cuts that may occur from a failure to increase the federal debt ceiling.
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