We’re talking COLA today. Hint: It’s not the kind you drink, which you might have suspected due to the capital letters.
COLA is shorthand for Cost Of Living Adjustment, which is a way to index things such as Social Security and federal retirement benefits to inflation.
Despite the best efforts of the powers-that-be to brand rising price inflation as “transitory,” it is becoming more and more evident that, if anything, we may be in the early days of what will turn into even higher inflation.
The federal government has admitted that in part by announcing a 5.9-percent COLA for 2022.
A story by Associated Press said this means the average Social Security recipient will get $92 more a month in benefits. The average couple will see an increase of $154 a month.
It sounds good, until you look at the reason for this most recent COLA, which is the largest in 39 years – almost four decades!
But look closer and you will discover that you are only being compensated – partially – for the fact that almost everything you need in terms of goods and services costs much more now.
The Feds are sure to claw back some of that COLA by hiking the cost of the Medicare Part B premium most retirees pay. Expect that increase to be more than 5.9 percent.
But it goes beyond that. Gasoline prices have soared. I’m currently insulated from that a bit due to a gas war. One area location has gas priced at $3.09.9 a gallon, while others have it at $3.45.9. I asked a cashier about this the other day and she said it was in response to an area convenience story re-opening a location and offering gas cheap.
I checked on the way to mow my mother’s lawn and that re-opened outlet is priced at $2.99.9 per gallon. I’m not sure how long it will last. I do know it’s a temporary phenomenon.
Increasing prices for luxuries such as food, shelter, transportation, healthcare, energy, are not as temporary.
That 5.9-percent COLA increase will help, but it will not come close to erasing the pain of the higher prices almost across-the-board.
Understand that this COLA is not a benevolent act by the Feds, but merely an acknowledgment that things are costing more as measured by their indexes, and those government measurement tools are known to err on the low side.
If the Feds are admitting to an inflation rate near 6 percent, you can be certain it is much higher. Some independent sources put the actual inflation rate at closer to 10 percent.
Unsolicited advice: If you want and/or need something, buy it now. It is unlikely to be available for less down the line except in the event of some incredible one-time sale event. But, in general, expect to pay more for almost anything you consume going forward.
This might cause you to reach for a drink, something stronger than cola, or COLA.
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