By Steve Pedry
Social Security's Biggest Raise In 41 Years Has A Unpleasant Surprise
Most retirees get a Social Security check every month. Even if the average retired worker earns $1,677 per month as of October 2022, many seniors rely on this income.
Gallup has been polling retirees since 2002 to find out how important Social Security income is to making ends meet.
During those 20 years, only 9–18% of respondents said that it is “not a source” of income they depend on.
The Social Security Administration's annual COLA announcement is the most-anticipated event each year.
Social Security's COLA ensures that beneficiaries don't lose purchasing power when prices rise (inflation). If retirees' costs rise, so should their monthly benefits.
The Consumer Price Index for Urban Wage Earners and Clerical Workers has been used to figure out Social Security's cost-of-living adjustment for the past 47 years (CPI-W).
This is an index that shows how the prices of a large basket of goods and services have changed over time.
Each of the CPI-major W's and minor price categories is weighted, allowing the index to be expressed as a single number.
When compared to a certain time period, that makes it easy to see if overall prices have gone up or down.
Social Security's COLA is straightforward. Only the third-quarter CPI-W values from the current and previous year are used.
in the third quarter of the current year is greater than last year, beneficiaries can expect a raise in the following year equivalent to the percentage increase.