The inflation and unstable economic situation caused by the COVID-19 pandemic are expected to remain critical concerns in 2022. Still, despite the measures taken by the government to address the economic crisis, the events that took place in 2021 have already caused legislative changes and social security modifications for U.S. citizens.
As the pandemic continues, especially with the rise of new strains that have heightened uncertainty about the future global response to the pandemic, the United States is taking all possible measures to rebuild the national economy to finally defeat the pandemic and its economic consequences.
Government policies aimed at stabilizing the country's economic situation have significantly adjusted the inflation rate. Still, this aspect has already made substantial changes and has seriously affected the least protected segments of the population.
The government applies a cost-of-living adjustment (COLA) to ensure financial benefits. It is designed to enhance Social Security and Supplemental Security benefits to counter the impacts of inflation and adjust the economic well-being of all segments of society, particularly federal retirees.
In general, the process for calculating financial benefits is based on the percentage of current income to the Consumer Price Index for Urban Wage Earners and Clerks (CPI-W) for a given period. The CPI-W index, in turn, reflects the change in the cost of certain goods and services.
For retirement benefits, the process is somewhat different. These calculations are usually based on the year of retirement, the COLA provision previously signed with the former employer, and the current Consumer Price Index. The COLA index fluctuates dramatically depending on the retirement date, as inflation, price fluctuations, and wage growth require the pension to be recalculated to reflect the current financial situation.
The inflation spike, which was estimated at 6.2%, and price volatility in 2021 was unprecedented. Therefore, according to official statistics, the U.S. government is set to increase the cost-of-living adjustment (COLA) to 5.9% at the beginning of 2022, which is a record figure for the past four decades.
The upcoming increase in the cost of Medicare Part B is partially caused by rising prices and increased demand for health insurance. Since Medicare Part B beneficiaries will have their benefits deducted from their total COLA, a direct relationship between these concepts cannot be denied.
This means that an increase in the cost of health insurance will increase the cash deductible, which will reduce total net income. In addition, experts at The Senior Citizens League (TSCL) predict that an increase in Medicare premiums will greatly affect people who receive the lowest Social Security benefits.
In 2021, Medicare intended to dramatically increase Plan B health insurance premiums. Still, due to the intervention of Congress, the final decision was to postpone the premium increase because of the severe situation caused by COVID-19. As a result, Medicare applied the usual formula, and premiums increased by only $3.90. However, financial sector volatility prompts the health insurance industry to reconsider price increases in 2022, and the monthly premium is expected to be $170.10 as the standard price.
Our team at Boston Independence Group is ready to protect your financial stability and help you with any retirement-related issues, providing modern end-to-end solutions and services tailored to your needs. Our experts will design the right individual retirement income plan and take advantage of even the most volatile economic market conditions.
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Boston Independence Group
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Advisory Services offered through Change Path, LLC an Investment Adviser. Boston Independence Group and Change Path, LLC are not affiliated.
Licensed Insurance Professional. Respond and learn how insurance and annuities can positively impact your retirement. This material has been provided by a licensed insurance professional for informational and educational purposes only and is not endorsed or affiliated with the Social Security Administration or any government agency. ARE-10581 | XXXXX – 2021/X/X
Boston Independence Group
45 Lyman Street, Suite 17, Westborough, MA 01581
Advisory Services offered through CreativeOne Wealth, LLC an Investment Adviser. Boston Independence Group and CreativeOne Wealth, LLC are not affiliated.
Licensed Insurance Professional. Respond and learn how insurance and annuities can positively impact your retirement. This material has been provided by a licensed insurance professional for informational and educational purposes only and is not endorsed or affiliated with the Social Security Administration or any government agency.
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Boston Independence Group
45 Lyman Street, Suite 17, Westborough, MA 01581
Advisory Services offered through CreativeOne Wealth, LLC an Investment Adviser. Boston Independence Group and CreativeOne Wealth, LLC are not affiliated.
Licensed Insurance Professional. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
Investing involves risk, including the loss of principal. No Investment strategy can guarantee a profit or protect against loss in a period of declining values. Any references to protection benefits or lifetime income generally refer to fixed insurance products, never securities or investment products. Insurance and annuity products are backed by the financial strength and claims-paying ability of the issuing insurance company. ARE-10581 21506 - 2021/11/2