Nearly three weeks ago things looked grim for our next Social Security raise.
Shortly after the start of our pandemic woes here at home, oil prices fell to a four-year low. Weeks later, gas is still amazingly cheap—and it will probably stay cheap so long as none of us can go anywhere.
For essential workers still commuting everyday, it’s a small consolation, but for beneficiaries, it’s pretty bad news. We still use a COLA calculation that factors gas prices heavily into whether inflation is high enough to warrant a Social Security raise.
That means when gas prices go down like this, seniors—the group using this commodity the least—often lose.
But today, it looks as though our 2021 COLA might be safe after all.
Even with gasoline prices plunging, one set of rising prices elsewhere could give retirees a raise come January.
Americans might not be hitting the local restaurants, but we’re definitely staying well-fed. With millions of people at home all day, we’re all cooking and preparing our own meals. Add shortages of certain household items to the mix, and the cost of groceries is steadily on the rise.
While this isn’t the greatest thing in the world for people trying to make ends meet, it may be just the thing to ease concerns about no Social Security COLA next year. We’ve all got to eat—grocery commodities are a big part of the COLA calculation market basket.
Whether or not this benefits seniors in the end remains to be seen. Grocery inflation may just save the 2021 COLA, but it may hurt beneficiaries’ purchasing power despite receiving a raise. If the cost of food continues to inflate, the COLA may not bring much relief to seniors who will also be paying the cost to have their meals.