Given the run up, there are many concerns about inflation’s impact on Social Security and retirement. Here are three main points to keep in mind.
#1
One question we are getting a lot is, “Does Social Security increase with inflation?” We’ve written this article explaining in full detail; here’s the synopsis.
Every year around October, the Social Security administration releases what is called a Social Security COLA for the year coming up. COLA stands for “cost of living adjustment.” It’s a mechanism by which your Social Security benefits are increased to account for the rising costs of maintaining your daily life. The main driver of the COLA is inflation.
#2
In 2021, the Social Security COLA was declared to be 5.9% for 2022. That was one of the biggest increases we had seen in quite a while. While nothing can be predicted with certainty, we would imagine that given inflation’s surge, the COLA for 2023 would be substantial – however that cannot be relied upon until we find out for sure this October when the COLA is released.
#3
I Bonds have become very popular. We wrote an article on the benefits and risks of I Bonds which you can read here. Please bear in mind that there is a purchase limit amount of $10,000 per year, so this isn’t a panacea for all the ills of inflation but rather a complement to the other elements of a comprehensive financial plan.
And now for something a bit unexpected…
As we have quite a few clients who are therapists, we’ve been writing on financial topics applicable to mental health professionals. Please see our blog roll below and join our separate therapist newsletter list to be notified when we publish a new article on the Psyched Up About Money blog.
Financial tips for therapists starting a private practice!
How does a therapist decide on a fee structure?
How to expand your therapy practice to another state
When do therapists retire (and how?)
The finance aspects of closing a therapy practice
Enjoy! As always, please contact us with any questions
-Judd