basket with groceries in the supermarket 2022 11 08 06 11 18 utc

How Does the Cost of Living Increase Affect You?

The prices of just about everything from groceries and gas to housing costs and medical care have been increasing steadily over the last year. And if you’re one of the 66 million Americans relying on social security benefits as a key factor in your retirement income, you’ve likely been feeling the financial squeeze the past few years.

According to a study by Ramsey Solutions, 40% of Americans are feeling the challenges of inflation followed closely by cost of living expenses.1 That’s where COLA comes into play. On October 13th, the Social Security Administration announced one of the biggest cost of living adjustments for social security beneficiaries in forty years. 

Let’s dive into what this means and how this affects you and your retirement income.

What Is the Cost of Living Adjustment?

The cost of living adjustment (otherwise known as COLA) was put in place by the social security administration (SSA) in 1972 to “ensure the purchasing power of social security benefits wouldn’t be eroded by inflation.”2 

Each year, the COLA increases depending on the Wage Earner’s Consumer Price Index (CPI-W) from July to September of the previous year. In 2022, the COLA was increased to 5.9%. And in 2023, it will rise to 8.7% to help seniors’ keep up with the rising costs of living. That will translate to an average of a $144.10 increase on your monthly benefits.3

If you’re expecting to receive social security this year, you don’t have to do anything different to receive your funds. Your increase will be dispersed to you with your January 2023 check.

Why Diversifying Your Retirement Income Is Important

For many retirees, social security benefits are a big deal. In fact, social security accounts for 30% of the elderly’s income.4 And for others, it accounts for more. 

With rising costs of just about everything, retirees and future retirees should start thinking about how to diversify your retirement income. Sure, a cost of living adjustment of 8.7% is helpful to keep up with medical bills, groceries, and living expenses. But it shouldn’t be your only source of financial income. 

Instead of relying on the Social Security Administration as your main source of income, it’s time to start financial planning. What can you do now to increase your other streams of income for retirement? Having a solid plan in place is key to making sure you don’t have to rely on the government (or COLA) for financial reassurance.   

Here’s the bottom line: Your financial hope shouldn’t be in COLA, social security benefits, or any other government program to get you through retirement. Not only will that leave you financially strained, but it puts your hope in something that might fail. Having a solid retirement plan and source of income all comes down to financial planning. And no matter how old you are, whether you’re receiving social security benefits, or if you’re just starting the process . . . it’s not too late.   

SageSpring Wealth Partners can help you come up with a retirement plan that works for you. One that doesn’t rely on cost of living adjustments to get you through the year. Contact an advisor in your area today and start working on a financial plan that works for you.

Sources:

1. The State of Personal Finance in America 2022, Ramsey Solutions

2. Cost-of-Living Adjustment, Social Security Administration

3. Press Brief, CPI-COLA Update, The Senior Citizens League

4. Social Security Fact Sheet, Social Security Administration


Any opinions are those of the author and not necessarily those of Raymond James. This material is being provided for informational purposes only and is not a complete description, nor is it a recommendation. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or a loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Material provided in part by Redstory, an independent, 3rd-party company. 

Investment advisory services offered through SageSpring Advisory Services, Inc., an independent registered investment adviser. SageSpring Wealth Partners is not a registered broker dealer and is independent of Raymond James Financial Services. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Representatives may not be registered to offer securities and advisory services in all states.

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615.861.6100
Jeffrey Dobyns
Jeffrey T. Dobyns

CFP®, CLU, CHFC

President, SageSpring | Financial Advisor, RJFS 
615-861-6102

Jeffrey T. Dobyns

President, SageSpring | Financial Advisor, RJFS

Jeff Dobyns has enjoyed extraordinary success providing comprehensive financial planning to retirees, entrepreneurs, entertainers, and executives by taking the time to truly know his clients, understand their goals and develop and execute their ongoing, strategic, financial plans.

Jeff earned his finance degree in business administration from Ohio University and has held executive positions with financial planning firms for more than two decades. After serving as Vice President of Investments of Lykins Financial Group, CPA’s, in his hometown of Westerville, Ohio, Jeff moved to Nashville, Tennessee to found SageSpring Wealth Partners in 2002. As its President, Jeff has led SageSpring to remarkable success, holding the distinction of being one of Raymond James’ top independent contractor offices, and a member of its Chairman’s Council*, every year since 2008.

Jeff’s true calling, however, is working directly with clients, helping them plan their financial futures in a manner that aligns with their values and helps provide them with financial confidence. To help meet these goals, Jeff leads the team of Dobyns Wealth Team and also incorporates the expertise of attorneys, accountants and other professionals to provide quality financial, tax and estate planning, and ongoing asset and risk management.

As independent advisory businesses, neither SageSpring Wealth Partners nor Dobyns Wealth Team hold any assets on behalf of clients, with such custodial and brokerage services being provided by Raymond James. As a leader in wealth management, Raymond James has an exemplary reputation and today serves more than $930 billion in client assets through 8,200 financial advisors worldwide (as of 9/30/2020).

In order to meet the highest standards of professionalism and ethics in the industry, Jeff is a CERTIFIED FINANCIAL PLANNERTM practitioner**, a Chartered Life Underwriter and a Chartered Financial Consultant. Jeff is also a participant of the Dave Ramsey SmartVestor program.

Jeff’s work and personal life are both guided by his faith and the Christian principles of honesty, generosity, compassion, and integrity. Accordingly, Jeff devotes considerable time and resources to a number of causes, including serving as a board member of Men of Valor, a prison ministry and mentoring program. He is also on the advisory board of The Signatry of Middle Tennessee, which works with families to increase their charitable giving to their favorite causes. Additionally, Jeff is on the advisory board for Halftime Institute, an organization that coaches marketplace leaders to discern and engage in their life purpose. Lastly, Jeff serves on the board of the Legacy Center of Nashville, a collaboration of independent coaching resources. He is a past board member of Porter’s Call, a Nashville charity that provides free counseling for musicians and their families, and the Martha O’Bryan Center, which empowers those in poverty to transform their lives through work, education, employment, and fellowship.

Jeff and his wife, Amy, are raising their family in Brentwood where they are members of the Brentwood Baptist Church, and their children, Gracyn, Hunter, and twins Tanner and Logan, attend the Christ Presbyterian Academy. For recreation, Jeff enjoys hunting, fishing and just being outdoors.

* Membership is based on prior fiscal year production. Re-qualification is required annually.

**Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

SmartVestor is an advertising and referral service for investing professionals (“SmartVestor Pros”) operated by The Lampo Group, LLC d/b/a Ramsey Solutions (“Ramsey Solutions”). Pursuant to an arrangement between Ramsey Solutions, SageSpring Wealth Partners and your advisor, your advisor pays Ramsey Solutions a flat monthly fee to: (a) be a SmartVestor Pro, (b) advertise services through the SmartVestor website, and (c) receive client referrals in the form of an initial introduction to interested consumers who are located in your advisor’s Pros geographic region. SageSpring Wealth Partners does not endorse and are not affiliated with Ramsey Solutions, except with respect to the arrangement described above, and neither Ramsey Solutions nor its agents are officers or employees of SageSpring Wealth Partners. Further, neither Ramsey Solutions nor its agents are authorized to provide investment advice or act in any way on behalf of SageSpring Wealth Partners, except in connection with providing your contact information to your advisor.

Ramsey Solutions’ relationship and agreement is between SageSpring Wealth Partners only. Raymond James Financial Services, Inc. is not affiliated with the solicitor arrangement between Ramsey Solutions and SageSpring Wealth Partners.

Raymond James is not affiliated with any of the organizations mentioned above.