Retirees are getting more than enough to offset higher food prices, but the impending pay raise is being more than offset by other costs. Optimizing cash flow remains the key.
Retirees are getting more than enough to offset higher food prices, but the impending pay raise is being more than offset by other costs.
Optimizing cash flow remains the key.
If it seems like your grocery bills are still getting bigger, you're not imagining things. They are. Although at-home food prices didn't rise between August and September, according to the Bureau of Labor Statistics, last month's average household grocery costs were up by 1.8% year over year.
That's not catastrophic. It's below the long-term average, in fact. It's also not the whole story. These same prices were up 2.1% year over year in August, and 2.6% higher in July, extending a cool-down period following an uncomfortable pace of price increases seen for the better part of last year. Indeed, compared to five years ago, consumers are paying about 22% more for groceries now.
There's some (relatively) good news on this front, however.
Higher food costs are more than covered, but...
The annual cost-of-living adjustment -- or COLA -- that the Social Security Administration makes to its benefits payments at the beginning of every year is based on a number of ordinary living expenses ranging from food to housing to transportation to healthcare.
It's not an equal-weighted average of these inputs, though. Since housing is most households' single-biggest expense, its change makes the biggest net impact on the annualized inflation rate used to determine any given year's COLA. Conversely, entertainment makes up a relatively small portion of the average household budget, so it doesn't make a major impact on the Bureau of Labor Statistics' measure of inflation.
That's the relatively good news for any retirees currently receiving Social Security retirement benefits. While grocery price hikes are finally starting to somewhat level off, continued price increases on other fronts -- gasoline and utility bills in particular -- made for a dandy of a cost-of-living adjustment for the year ahead. This past week, the Social Security Administration announced next year's benefits payments will be 3.6% bigger than this year's. Based on the typical monthly payment right now, this will mean an average increase of about $75 per month.
No net "win," and even a possibility of added financial stress
Averytin News Financial update.