2021 Senior Finances and Retirement

With inflation on the rise, Social Security recipients will get a raise next year. The question is, how much?

The latest estimate from The Senior Citizens League, an advocacy group, predicts a cost of living adjustment (COLA) of between 6% and 6.1%. The estimate came as the latest consumer price index data was released Tuesday.

The increase will be reflected starting in January 2022. An increase within the predicted range would be the largest since 1982, when the COLA was 7.4%.

The government bases the COLA on the CPI, a measure of inflation, through September. Mary Johnson, Social Security policy analyst for The Senior Citizens League, says there is one more CPI report before the government officially announces the increase in October.

“This year is particularly difficult to forecast with certainty,” Johnson said. “The inflation patterns, caused in large part due to the COVID-19 pandemic, were unprecedented in my experience.” 

While a 6% increase in monthly payments would no doubt be welcome news for seniors, Paul, of Ardara, Pennsylvania, notes that Social Security recipients don’t always reap the gains of a benefit increase because Medicare premiums are deducted from Social Security payments.

“Cost of Medicare needs to stop increasing every year after they increase your Social Security,” Paul wrote in a review of Aetna dental insurance. “The people lose every time.”

Inflation may have peaked

Johnson said it is likely the Social Security benefit increase will be at the low end of the projection because inflation appears to be moderating. But she says there is little doubt Social Security recipients will receive a larger benefit increase than they did in 2021.

“Higher gasoline and transportation prices in particular are behind the high COLA estimate for 2022, because those expenditures are given greater weight or importance in the consumer price index that’s used to calculate the COLA,” Johnson said. “That works to the advantage of retired and disabled beneficiaries for the COLA payable in January of 2022.”

Since 2010, COLAs have averaged just 1.4%. Inflation was so low that no COLA was payable at all in 2010, 2011, and 2016. In 2017 the COLA was almost zero, at just 0.3%.

With inflation surging in the U.S., Americans on Social Security could receive a significant pay increase next year.

Each year, seniors’ monthly benefit is adjusted to account for inflation. In the last two decades, as inflation has largely been absent from the economy, the monthly payment has risen only slightly. In 2021, the increase was 1.2%. That could change in 2022. 

The Senior Citizens League has calculated next year’s cost of living adjustment (COLA) and projects that Social Security benefits will increase by 6.1%. It would be the biggest increase since 1983, an era when inflation was increasing at double-digit rates.

The COLA is based on the Consumer Price Index (CPI) for Urban Consumers in July, August, and September. It’s also heavily weighted for the price of gasoline, which has risen sharply in recent months. The COLA will be announced in October, and the first adjusted benefit payment will be made in January.

Changing the formula

Meanwhile, there’s a move in Congress to change the way the benefits COLA is formulated, and that could increase benefit payments to seniors even more. Last week, Rep. John Garamendi (D-Calif.) introduced a measure to base benefit increases on the cost of things seniors use most, such as health care.

“Seniors and disabled citizens rely on Social Security benefits for a large portion of their income, and it’s about time for Social Security benefits to reflect their lifestyles,” Garamendi said. “Using a COLA that actually reflects how retirees spend their money – especially in health care – is a no-brainer that will increase benefits and make Social Security work better for the people it serves.”

Garamendi’s bill has already attracted broad support, with 23 original co-sponsorships and senior advocacy groups urging its passage. Nancy Altman, President of Social Security Works, supports the change, saying the current way inflation is measured doesn’t reflect the rapidly rising costs of prescription drugs.

“By more accurately accounting for the costs faced by Social Security beneficiaries, this legislation better prevents the erosion over time of Social Security’s modest but vital earned benefits,” she said.

With winter rolling in and the pandemic still hanging around, many seniors are looking to find more ideal vistas to retire to. The hard part is finding a close-to-perfect fit and wading through the thousands of options available with niche retirement communities.

Coventry Direct, a company specializing in life insurance, analyzed over 2,600 55+ communities, assigning numerical values for factors like affordability, amenities, and security features. Out of that came an overall score for each community which Coventry used to determine the “top retirement communities” in the U.S.

Winners and losers

When ConsumerAffairs took a look at the raw data the analysts had to pore through, it was apparent that retirees simply can’t make a snap judgment when it comes to picking somewhere to move to. There’s the cost of housing, the contemporary wrinkle of being tech-friendly, and a countless number of amenities that seniors want to make sure are available to them to make their move worthwhile.

"One of the biggest takeaways from this project that we want to emphasize is that while many of the top-performing communities are located in traditional retirement locales like Florida, Arizona, and California, our analysis uncovered vibrant, high-quality communities teeming with the kinds of amenities that make life after 55 a dream throughout the country,” Josh Koebert, a research assistant for Coventry Direct told ConsumerAffairs.

“With a little research, most people should have no problem finding a 55+ community that checks all the right boxes for their lifestyle and geographic preferences."

Taking home the top spot in the survey was ‘The Villages’ -- a site US News & World Report called “Disney World for Adults.” Situated between Orlando and Ocala, Florida, the location was rated as the “best retirement community,” scoring 95.3 out of a possible 100 points. In second place is the 11,000-acre ‘Sun City West’ in Arizona, about 30 miles from Phoenix. It received a total score of 91. 

When it came to the illusion that all retirees wind up in Florida, the analysts did some myth-busting of their own. “Our rankings actually show that it is possible to find incredibly high-quality retirement living all across the nation,” they wrote. 

“Only three of the top ten communities were located in the Sunshine State, with just as many Arizona locations showing up at the top of the rankings. Nevada, South Carolina, Texas, and California also make appearances in the top 10.”

Full rankings

From top to bottom, here are how the top 25 stacked up overall:

1. The Villages (The Villages, FL)

2. Sun City West (Sun City West, AZ)

3. Sun City Anthem (Henderson, NV)

4. On Top of the World (Ocala, FL)

5. Sun City Palm Desert (Palm Desert, CA)

6. Robson Ranch (Denton, TX)

7. Canoa Ranch (Green Valley, AZ)

8. Sun City Hilton Head (Bluffton, SC)

9. Quail Creek (Green Valley, AZ)

10. Lely Resort (Naples, FL)

11. Heritage Village (Southbury, CT)

12. Bella Vista Village (Bella Vista, AR)

13. Lake Ashton (Lake Wales, FL)

14. Stonecrest (Summerfield, FL)

15. SaddleBrooke Ranch (Oracle, AZ)

16. Sun City Peachtree (Griffin, GA)

17. Green Valley Recreation (Green Valley, AZ)

18. Sun City Grand (Surprise, AZ)

19. Pelican Preserve (Fort Myers, FL)

20. Sun City Shadow Hills (Indio, CA)

21. Sun City Lincoln Hills (Lincoln, CA)

22. Timber Pines (Spring Hill, FL)

23. Tellico Village (Loudon, TN)

24. Oak Run (Ocala, FL)

25. Siena (Las Vegas, NV)

Amenities scores vary from community to community

When it comes to amenities, the researchers say seniors favor three import factors -- exercise and wellness, entertainment, and outdoor activities. In the overall amenities ranking, there were six communities that had perfect scores:

• Sun City Anthem (Henderson, NV)

• Sun City West    (Sun City West, AZ)    

• Sun City Palm Desert    (Palm Desert, CA)

• Laguna Woods Village (Laguna Woods, CA)

• Heritage Village (Southbury, CT)    

• The Villages (The Villages, FL)