In March, many people enjoyed a $1,400 stimulus check thanks to the American Rescue Plan. But at the moment there is little chance of a fourth stimulus check coming in the near future. That’s because the economy has improved tremendously over the past six months, and right now it’s harder to defend broad support.
But some proponents insist that while the general public may not need new stimulus, seniors with Social Security should be the exception. In fact, the impartial Senior Citizens League is calling on lawmakers to send Social Security recipients another round of $1,400 checks.
Seniors need help to maintain their purchasing power
At this point, we don’t know how big of an increase (known as a cost of living adjustment or COLA) seniors will get in 2022. This is because the annual COLAs are calculated based on data from the third quarter of the Consumer Price Index for Urban Wage Earners and White-collar workers (CPI-W).
Currently, we only have July and August CPI-W data. And until the September issue comes in, that COLA can’t be determined.
But seniors should soon be getting the official word on their 2020 COLA. And however it plays out, it looks like Social Security recipients will get their biggest raise in decades.
In fact, based on the data we already have from the CPI-W, experts predict next year’s COLA to be at least 6%. In 2021, on the other hand, seniors saw their benefits increase by only 1.3%.
But despite the generous COLA expected for 2022, the Senior Citizens League is pushing for Social Security beneficiaries to need help to maintain their purchasing power. For years, Social Security COLAs have done poorly to keep up with inflation. And even if there is a massive increase next year, the reason behind it will come down to extreme increases in the cost of consumer goods that have affected seniors and workers alike.
Or, to put it another way, even if seniors get a big raise for 2022, they’re unlikely to come out on top financially because the general cost of living has soared. And so giving Social Security beneficiaries their own stimulus check could mean actually increasing their purchasing power.
Will lawmakers get on board?
Whether lawmakers will agree to a senior-specific stimulus check has yet to be determined. But it’s clear that seniors who get most of their income from Social Security have struggled for years, and could continue to do so even if the 2022 increase is as generous as experts think it will be.
Let’s not forget that Medicare Part B premium increases will also be the wildcard seniors they will have to grapple with in conjunction with that increase. If the cost of Part B rises enough, that alone will erode the benefit seniors can derive from higher Social Security salaries.
Will the process of calculating COLAs change?
The short-term viability of a senior-specific stimulus control may be questionable. However, a change that could the pike coming down is a shift in the way COLAs are calculated.
For years, leading attorneys have called on lawmakers to use the Consumer Price Index for the Elderly (CPI-E) as the basis for calculating COLAs. The logic is that this index more accurately reflects the costs faced by seniors.
Swapping the CPI-W for the CPI-E could result in higher COLAs down the line, which in turn could give seniors more purchasing power. And while that doesn’t have the same ring as a fourth stimulus check, it can still be a lifeline.