SSDI and SSA Retirement: Government Scam #1

OK, we’re not conspiracy theorists over here, but we all know the government stretches the truth right? So how do they stretch the truth when it comes to Social Security benefits? 

The Government Delays Cost-of-Living Adjustment (COLA) Increases 

Well, the first and most obvious way is that they delay the cost-of-living increase by one year and three months before Social Security disability and retirement beneficiaries see any kind of increase. 

I don’t think many people noticed when inflation was zero to 2%. But now that inflation is getting up near 10%, we can see how this works very easily. 

How the Government Really Puts the Screws to You When They Decide the COLA Increase 

Here’s how it works: Social Security monitors the consumer price index (CPI) year-over-year change during the third quarter of each year ending in September and sets the COLA accordingly. For example, if the CPI increased from October 2020 to September 2021, then Social Security gives retirement and disability beneficiaries a corresponding cost-of-living increase. 

As you may know, the CPI increase was 5.9% in 2021 but that 5.9% was put into effect as of January 2022 for most recipients. Yes, it’s technically put into place in December 2021, but beneficiaries receive payments a month after they are entitled to the increase. So in the year 2020-2021, any inflation that started in October 2020 would not be shown in a cost-of-living increase until January 2022 (thus the one year and three months of lag time). But it seemed that not many people noticed this lag time because inflation was not terrible in 2020.  

But now, inflation has been running super hot, with prices at the grocery store up across the board by 10% or more. Prices for gas have increased 50% year-over-year. Rent prices have increased 20% or more nationally year-over-year. CPI says rents have only increased 6% (in another post, I will explain how the government gets away with fudging that number). 

However, in this post, I just want to focus on the timing of benefit increases. To that effect, let’s talk about rent. 

2021 Rent Increases Won’t Reflect in COLA Until 2023

Many of you were hit with a gigantic rent increase last year around September or October 2021. That rent increase was not reflected in the cost-of-living increase for Social Security beneficiaries that began in January 2022. If your rent was, like many people, increased by 20% or more late last year, you will not see a corresponding increase in your Social Security benefits until January 2023. The same goes with gas prices, food prices, clothing, used car prices, or anything else that you have to pay for. 

Questions or Concerns? Contact Me — a Baltimore Social Security Lawyer Who Cares

The government put this lag in place so they can take your money from Social Security and Medicare payroll taxes without paying you back for almost a year and a half. It does not have to be this way. Cost-of-living increases could be automatic month by month or quarter by quarter. But the bureaucrats have found a way that they think no one will notice to save money and you are (or will be) a victim of this practice. If you want to discuss your situation with a skilled and knowledgeable Baltimore Social Security lawyer, contact me today.