The cola is big enough to affect the entire economy.
It affects one in five Americans, including Social Security recipients, disabled veterans, and federal retirees, and nearly 70 million families.
About half of the elderly live in households where Social Security benefits make up at least 50% of their income, and a quarter rely on monthly payments for all or almost all of their income. For this latter group, COLA can really make a difference in what they put on the table.
Do individual pensioners also provide COLA?
Inflation protection is central to Social Security benefit design, but less common in traditional private pensions. The benefits paid for by most employers’ plans gradually lose some of their purchasing power over the years.
Social Security not only raises retired checks to offset inflation, but also adds that amount to the individual’s core interests, so this compound interest increases when future COLAs are taken into account.
Can Social Security Keep COLA Payments?
Proposals to increase or decrease the COLA have emerged in the context of a comprehensive Social Security review. Many proponents of older people argue that the inflation index currently in use does not adequately reflect the higher medical costs caused by aging.
Explainer: Why Social Security COLA Jumps Next Year | Government. & Politics
Source Link Explainer: Why Social Security’s COLA Jumps Next Year | Government. & Politics