COLA for 2023

Here's a reminder, Inflation in November 2020 was 1.2%. Even if you had your money in a bank account paying ZERO percent interest, that means you only lost about 1.2% of your buying power that year. Today, some of the better savings accounts are in the area of 2.7%. You can get over 4% on one year treasury bills. Yet, with inflation at 8.2% you are now losing anywhere from 4% to 5.5% of your buying power ever year.

This is a disaster for anybody saving money for anything, whether it's retirement, a car, a vacation, emergency fund, etc. That buying power is gone. POOF! And even if inflation slows down, the buying power does not come back. It's a permanent loss. So, while the SS increase helps, for many if not most of us it simply isn't enough.

This is very bad. Do what you can to protect yourself financially. Make sure the dollars you have in savings, investments, etc. are in low-risk places (no crypto, swamp land, precious metals, Albanian goat cheese futures, etc. ) and try to earn as much interest as you can.

P.S. The loss in buying power is before you pay any state of federal income tax on the interest you earn. Obviuosly, the tax makes the damage to your buying power even greater.
 
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Brookswood said:
Do what you can to protect yourself financially. Make sure the dollars you have in savings, investments, etc. are in low-risk places
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Yes, good advice. I am belatedly realizing that savings are safer in i-bonds or TIPS, or at least in a short-term Treasury bill.

My savings account used to pay really a good interest rate back in the 90s, but I noticed this week that my bank is promoting a different type of account to get a good rate now, instead of increasing the rate for the account type that used to be for high rates. I am too lazy to switch to a new account so I am holding the money in Treasuries until the last moment before I need the money then I am transferring to my bank account (previously I was transferring the upcoming quarter's money to my bank and letting it sit there).
 

I find the short term T-bills provide much better interest than any bank options I have found, plus the money can be somewhat readily available if the need arises.
 
HarryHawk said:
I find the short term T-bills provide much better interest than any bank options I have found, plus the money can be somewhat readily available if the need arises.
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laddered 3 month Treasuries that come due every few weeks is a good alternative as long as a person has some stash of cash.

Alas, I see no political will among our elected representatives to do much about inflation, other than to blame each other and make senseless excuses.
 
mathjak107 said:
Exactly ..that is why I want what I want and I don’t buy these other cheaper brands .. I rather buy something else I like and when they have what I want on sale I will stock up ..I like the no added sugar klondikes and they are 7 bucks a pack of six here .but every few weeks they are 2 for 6.00
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We do the same thing regarding sales and stocking up on preferred brands. Luckily, however, I've found that I really like many of the store brands by Shoprite (and Price Rite) and Walmart. Good thing because they save tons of money.
 
The root cause....Thanks to the so called " Federal Reserve System", since it's création by 5 NY bankers, we have 98% loss of the dollars purchase power.

Read our US Constitution art. 1 sec 10.

Let's audit and abolish the illegal private corporation, the Fed! With a real gold and silver based dollar, there's no need for the COLA, and other tricks of the politicians and government.
Jon
 
Jean-Paul said:
The root cause....Thanks to the so called " Federal Reserve System", since it's création by 5 NY bankers, we have 98% loss of the dollars purchase power.

Read our US Constitution art. 1 sec 10.

Let's audit and abolish the illegal private corporation, the Fed! With a real gold and silver based dollar, there's no need for the COLA, and other tricks of the politicians and government.
Jon
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and how much have salaries increased since then ?

while inflation has reduced the dollars value , salaries have not stayed the same for decades either.

i know we have averaged better then inflation in our assets for more then 30 years making the dollars fall just about a moot point .
 
Ken N Tx said:
On AARP>>
Next year could bring the biggest increase to Social Security benefits in four decades, with rising prices fueling forecasts of a nearly double-digit cost-of-living adjustment (COLA) for 2023.
The inflation gauge used by the Social Security Administration (SSA) to set the annual COLA came in at 9.1 percent for July — the first of three months the agency uses to determine the final figure, slated to be announced in October. Any increase in benefits would take effect in January 2023.
“It’s not possible to be precise until we see the data for the next two months, but it’s probably safe to say at this point we can expect a COLA in the 8 to 10 percent range,” says David Certner, legislative counsel and director of legislative policy for government affairs at AARP. That would be the biggest increase since 1981, when the COLA was 11.2 percent.
Any estimates are preliminary; the actual COLA will depend on changes in consumer prices through the end of September. A 9 percent COLA would boost the average Social Security retirement benefit by about $150 a month in 2023.
“I think somewhere in the 9 percent range is probably a reasonable guess,” says Richard Johnson, director of the retirement policy program at the Urban Institute, a Washington, D.C.-based research organization.
Johnson notes that July’s inflation rate dipped slightly from June’s. “If that trend continues, we’re looking at about an 8.6 percent COLA, but it could be a little higher,” he says. “It’s hard to predict exactly how, in particular, energy prices are going to evolve over the next few months. I think that’s probably the big uncertainty.”
Economist Bill McBride, in his Calculated Risk blog, estimates a similar range of 8.5 percent to 9 percent. Josh Gordon, director of health policy for the Committee for a Responsible Federal Budget, a nonpartisan fiscal policy think tank, predicted 9.9 percent “if things continue on trend” but says the COLA could be around 8.9 percent “if we had no more inflation for the rest of the year.”
The 2022 COLA of 5.9 percent increased the average retirement benefit by $92 a month. In 2021, payments grew by an average of $20 a month on the back of a 1.3 percent adjustment.
A rise in Medicare Part B premiums in 2023 would offset a portion of the COLA increase for Social Security recipients who have Medicare premiums deducted directly from their benefit payments (as is the case with about 70 percent of Part B enrollees). However, the 2023 Part B premium increase is expected to be smaller than this year’s record increase. Medicare typically reveals the following year’s premium prices in October, around the time the SSA announces the new COLA.
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I just got the letter announcing my new improved amount for 2023. No need to worry. If you didn't get a letter, contact them. No need for extra drama...
 
Brookswood said:
It sounds good until I realize that my already meager IRA accounts have taken a huge hit in real terms thanks to nearly double digit inflation. It will take many years of this SS increase to makeup for that loss. Simply put, my moneh will buy me about 10% less than a year ago. What a ripoff!
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Is it too late for you to get a good wealth advisor? No need to watch the market if you have one.
 
Conce said:
Is it too late for you to get a good wealth advisor? No need to watch the market if you have one.
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if one has have been investing for years they should still be way ahead of inflation .

markets cycle , they always do and your balance varies . but over time through the cycles markets have taken the little bits we manage to save and grew them in to meaningful amounts despite the cycles
 


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