Inflation is something that is present for all citizens worldwide, although it affects Social Security beneficiaries in the United States in a very direct way. The constant increases in prices everywhere mean that many Americans can no longer afford to make payments directly without running into financial problems. And this is even more so for citizens who collect a Social Security check.
While having a Social Security benefit as the only source of income is not the best idea, it is sometimes an unavoidable situation. And that’s why even with COLA increasing the monthly check every year the money is not enough to pay for all expenses. The purchasing power of retirees in the United States is going down a lot and it is something that The Senior Citizens League has pointed out.
Experts related to the subject have stated that today citizens have lost 36% of their purchasing power. These figures are related, above all, to retirees who applied for their benefits after the year 2000. Since then, inflation has increased dramatically and the COLA has not increased enough to cover all these expenses.
Why is the Social Security COLA not enough?
Keep in mind that the COLA increases Social Security checks based on the previous year’s inflation. This means that the percentage of dollars that each monthly check increases does not correspond to the year in which the increase occurs. Therefore, we find ourselves in a much tighter and tighter situation.
To put it in numbers and see a clearer example: if inflation in the year 2023 is 15%, the Social Security Administration will increase through the COLA by a percentage close to that 15%. However, when the year 2024 arrives, we will not only see the 15% increase in 2023 prices, but that 15% plus another percentage corresponding to the year 2024.
And that is how citizens lose so much purchasing power. Experts estimate that as of today people in the United States with Social Security have lost 36%. That percentage is very high and at some point the federal government will have to do something about it.
What is the maximum retirement check in 2023?
Currently, a retiree maxing out his or her check can reach $4,555 per month. However, this is not attainable for all citizens. In order to achieve the maximum Social Security check, it is necessary to plan for retirement well in advance.
In this regard, retirees who want to do so must delay their retirement age until 70 years of age. If we apply for retirement earlier, it will be impossible to reach that maximum figure. In addition to that, it is also necessary to work a minimum of 35 years with a high salary.
Anyway, looking at the big increase in inflation in recent years we can see that living on just the Social Security check is not a good idea. So we should look for other alternative sources of monthly income, as well as saving during our time as a worker.