Podcast Episode 229: Social Security Announces Large COLA Increase + Mailbag Questions

Today’s Wisdom:

Retirees received some good news ahead of 2022 when the Social Security Administration announced a 5.9% Cost of Living Adjustment for people that receive the benefit beginning in the new year. What does the increase tell us about inflation? We’ll discuss that on the show and answer a few financial questions from listeners.

Want to save time? Click the timestamps below to jump ahead to specific spots in the episode.

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What You’ll Learn:

Any time retirement benefits go up, people will welcome the news.

Retirees found out that the 2022 Social Security benefits would be increasing by nearly 6% for 2022 and it’s one of the most significant jumps in a long time. It’s no surprise that this has been a topic of interest for many of the clients we work with so we wanted to take a little time on the podcast to discuss it.

The first thing to understand is that these Cost of Living Adjustments are meant to reflect the rise in expenses we incur in our daily lives. That’s also known as inflation. The biggest thing this tells us is that regardless of what you hear about whether inflation is or isn’t a problem, this increase speaks volumes.

Most of our clients are within five years of retirement or already retired. We look at the items our clients are commonly using and those things are all up right now. There’s no denying that prices are higher and Americans are facing those added costs every day. This benefit will help the people receiving benefits, but it’s a good reminder to make sure you are building a financial plan that is outpacing inflation.

Along with this primary topic, we also cover a few others thanks to some great listener questions that came into the show. The first is what can someone do if they’ve maxed out their allowed contributions and have additional funds they’d like to save. The answer will depend, but Joel is a big proponent of individual stocks, which he’ll explain on the show. You need to think long-term about positioning that money with taxes in mind and stocks and certain mutual funds can help you do that.

The next question came in from someone that wants to help make sure their mom is taken care of later in life. What’s the best way to do that? First of all, if you parents haven’t been open to financial advice before, then that likely won’t change now. It’s best to get them in front of a financial advisor if they are willing, but at least help them meet with an estate planning attorney to make sure all of their legal documents are up-to-date.

Finally, we have a question about rental income and this is one we get a lot. Many people want to get into real estate, but it often takes a lot of work and the return isn’t as good as other avenues. But as long as the rent is more than covering the mortgage and putting money in your pocket, then there’s probably no problem with it.

No matter where you are in your saving and planning, it’s beneficial to take advantage of our complimentary Money Map review. Get in touch and we’ll set you up with a time to come in and discuss your financial future.

[1:01] – Social Security COLA increase

[3:18] – Is inflation higher than the increase?

[4:56] – Mailbag question on saving after maxing contributions

[7:14] – Diversification of taxes

[8:21] – Mailbag question about taking care of parents

[11:45] – Mailbag question about rental properties

Thanks for listening to this episode. We’ll be back again next week for another show.

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Final Thoughts:

“Social Security goes up to keep up with inflation. That is a sign, despite what you’re being told by certain politicians, that inflation is here.”

– Joel Johnson

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