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Inflation has been making headlines on a nearly daily basis for months and for good reason. Prices rose 8.5% between March 2021 and 2022—the biggest year-over-year gain since December 1981. April was similar at 8.3% and things are showing no sign of slowing down in May. The current administration has made tackling inflation a central objective but reports show that the response has been too little, too late. This bleak picture has led those who rely on Social Security benefits to worry about being able to make ends meet. Luckily, there is hope on the horizon.
The Social Security Administration’s annual cost-of-living adjustment (COLA) is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. Over the last twelve months, this index has shot up 9.4%, leading experts to predict that the 2023 Social Security COLA could be as high as 7.6%.
This is excellent news for anyone who depends on Social Security benefits. Despite a social security increase in 2022 of 5.9%—the largest in 40 years—last year’s COLA fell short of balancing sky-high inflation rates. Next year’s numbers fail to match the price increases consumers face but it comes close. This helps, but it still leaves many grasping for answers.
Protecting Your Assets from Rising Inflation
Record increases in Social Security benefits ease the burden of asset protection but they don’t relieve the need for a robust plan. Proofing your savings against rising consumer prices means redistributing liquid assets and thinking carefully about income stream composition. Retirees want to be especially cognizant of this concern as the time frame upon which they can plan their finances is smaller.
An experienced financial advisor in conversation with an estate planning attorney is your best resource for designing a plan to protect your retirement savings. Together, professionals in these fields can explain the importance of moving your portfolio into safer asset classes as you reach your 50s and 60s. Later, they can likewise provide advice regarding secure retirement investments.
Retirees who rely on Social Security benefits have every reason to feel relief about the 2023 COLA and yet a responsible financial plan goes further than thanking your lucky stars. True security for you and your family requires both financial planning and estate planning. At the Law Firm of Christopher W. Dumm, we can assist you in doing both.
Contact the Estate Planning Attorneys at the Law Firm of Christopher W. Dumm