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Social Security COLA Increase: What It Means for Your Benefits

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Credits:WSJ

The Social Security Administration will release the annual cost-of-living adjustment on Thursday. This will give millions of older Americans whose incomes have been cut by inflation a little bit more money. The so-called “cost-of-living adjustment,” or Social Security COLA will increase benefits every month in January by an amount that is likely to be the highest in four decades.

Since 1975, the Social Security Administration has changed benefit payments every year to account for inflation. This is done to protect the buying power of the more than 70 million pensioners and disabled people who depend on Social Security.

What is a Social Security COLA increase?

According to CBS News, a cost of living adjustment of 8.7 percent in 2023 would result in an average monthly rise of $144.1. With this change, the average monthly payout will increase from $1,658 in 2022 to $1,802 in 2023.

CBS News pointed out that the cost-of-living adjustment (COLA) for 2023 will affect payments due in December 2022, but payments won’t be sent out until January 2023. As of January 11, 2023, beneficiaries whose birthdays fall between the first and tenth of the month will begin receiving payments that include the 2023 cost-of-living adjustment.

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First payments will be made on January 18 for individuals born between November 11 and December 20, and on January 25 for those born between December 21 and December 31.

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Expect the COLA to be at least 8.5%, the largest yearly rise since the COLA of 11.2% in 1981, even if September inflation data is substantially better.

The CPI for wage earners and office workers in urban areas is used to figure out the COLA. Specifically, it is based on the annualized rate of inflation seen during the third quarter. The data for July, August, and September will be added up and divided by three to get an average value. The percentage of change for 2023 will be calculated by comparing the number for 2022 to the average for the third quarter of 2021.

What is Social Security COLA

The Cost-of-Living Adjustment (COLA) in Social Security is best thought of as a way to pay for inflation, which means that living costs go up. In a perfect world, Social Security COLA benefits would rise in tandem with the rate of inflation so that the millions of retirees who rely on the program wouldn’t see their buying power decline. The cost-of-living adjustment (COLA) is the “increase” given annually to account for inflation.

 Social Security COLA -Tethering Inflation

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) has been used as a measure of inflation for the program since 1975. In the CPI-W, there are eight main groups of expenses, with dozens of smaller groups as subgroups.

Each of these smaller groups has its own weight in the overall index. The CPI-W is a single number because of the weightings, so it’s easy to compare it from month to month or year to year to see if prices are going up, staying the same, or declining.

Figuring it Out

Social Security COLA that recipients receive is surprisingly simple to figure out. In this article, we will compare the average CPI-W reading from the third quarter of the current year (July-September) to the same data from the third quarter of the previous year. There has been inflation, and recipients will get a raise if the average CPI-W for this year is higher than the average CPI-W for last year.

To figure out the increase in benefits, the percentage increase in the average CPI-W from the previous year is rounded to the nearest tenth of a percent. We hope to bring you more on the Social Security COLA increase this year.

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JPMorgan Targeted by Republican States Over Accusations of Religious Bias

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WASHINGTON—JPMorgan Chase has become the target of a campaign by Republican state officials seeking to expose what they see as religious discrimination in the bank’s business practices.

Nineteen Republican state attorneys general sent a letter this month addressed to JPMorgan Chief Executive Jamie Dimon, accusing the nation’s largest bank of a “pattern of discrimination” and of denying customers banking services because of political or religious affiliations. In March, 14 Republican state treasurers wrote a similar letter to Mr. Dimon, making the same accusations.

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More Wives Now Outearn Their Husbands. They Also Stay Together Longer.

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Marriages in which wives outearn their husbands are not only more common, but less likely to end in divorce than in the past.

Couples married in the late 1960s and 1970s were 70% more likely to divorce when wives earned the same or slightly more than their husbands compared with couples where the husband earned more, according to research from Christine Schwartz and Pilar Gonalons-Pons, sociologists at the University of Wisconsin-Madison and the University of Pennsylvania, respectively. For couples married in the 1990s, however, the divorce rate for those with female breadwinners had fallen to 4% higher than male breadwinners.

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Big Tech’s Rebound Plays to Individual Investors’ Growth-Stock Bets

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Shares of large U.S. technology companies are powering the broader market higher again, vindicating many individual investors who bet big on growth stocks.

Together, Advanced Micro Devices Inc., Google parent Alphabet Inc., Amazon.com Inc., Apple Inc., Meta Platforms Inc., Microsoft Corp., Netflix Inc., Nvidia Corp. and Tesla Inc. comprise roughly a quarter of the S&P 500’s market cap, according to FactSet. That means they have an outsize influence on the direction of the major stock index.

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Corporate Insiders Step Up Stock Buying After Banking Turmoil

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Corporate insiders raced to buy shares of their own companies after last month’s banking crisis, signaling a vote of confidence in this year’s market rebound.

More than 1,000 officers and directors at more than 600 companies bought their own stock in March. That is the highest number on an individual and company basis since last May, according to the Washington Service, an insider-trading data analytics provider. The ratio of insider buying to selling last month swelled to the highest level since September, the firm found.

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Apple Pay’s Long Road to Paying Off Is Getting Shorter

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Apple Inc. hasn’t replaced your wallet yet, but it hasn’t given up trying. Its latest moves could put it much closer to success.

Chief Executive Officer Tim Cook once proclaimed that his company would “forever change the way all of us buy things.” His boast was made in 2014, alongside the company’s biggest product launch in years—the iPhone 6. More than eight years later, most of us are still fishing plastic cards out of our wallets or typing numbers into a form when we shop.

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Private Equity’s Food Binge Goes Sour

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Private-equity funds went on a buying binge for food companies before

markets crashed in 2022. Now they have indigestion that is contributing to rising prices at the grocery checkout.

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The funds snapped up a record 786 makers of food and beverages worth $32 billion in 2021, using bundles of debt to pay for their purchases, according to data from S&P Global Market Intelligence. The financiers projected that staple goods would keep making profits no matter how the economy fared. But that forecast changed, with the food industry soon hammered by higher labor costs, supply-chain disruptions and surging inflation.

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Investors View Corporate Earnings Season as Next Test for Stocks

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This week’s kickoff to the corporate earnings season offers the next trial for the market as investors consider whether U.S. stocks can hold on to recent gains in the face of

deteriorating profits.

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Analysts expect companies in the S&P 500 to report a second consecutive decline in quarterly earnings. First-quarter profits are projected to drop 6.8% from the same period a year earlier, according to FactSet. That would mark the steepest earnings decline since the second quarter of 2020, when the onset of the Covid-19 pandemic resulted in a 32% profit contraction.

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Owe Taxes This Year? Here’s How to Lower Your Balance Due in the Future.

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Most Americans equate tax season with the hope of getting a big refund. Yet one in four taxpayers typically owes money at the time of filing, according to the Internal Revenue Service.

A tax bill can come as a costly surprise, so it pays to know your payment options. Last year, the average balance due was nearly $8,000, compared with an average of $5,273 from 2010 through 2019. Given that average refunds for those who have filed their taxes are smaller this year so far, balances due could be larger, said Erica York, a senior economist at the Tax Foundation in Washington, D.C. 

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The Right Amount of Cards, Cash and ID to Carry in Your Wallet

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As phones take on more of the work of wallets, people are rethinking how much they still need to carry in cash, cards and identification.

Four in 10 Americans say none of their purchases in a typical week are paid for using cash, according to a 2022 survey from the Pew Research Center. That is up from 29% in 2018 and 24% in 2015, reflecting a trend accelerated by the pandemic. Plastic is getting displaced, too: 59% of Americans said they increased their use of digital payment methods last year, according to Mastercard’s Payment Index. 

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Your Next Greece Getaway Could Be at a Hotel Owned by Goldman Sachs

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Goldman Sachs Group Inc.’s search for steady revenue has led it to an unlikely place: the epicenter of a financial crisis that rocked Europe a decade ago.

The Wall Street giant is investing about €150 million to €200 million (about $163 million to $218 million) in three seaside resorts in a northern region of Greece, according to people familiar with the matter. The plan is to spruce up the hotels, which are currently closed, and open them to guests in the next couple of years, the people said. Goldman bought the hotels in October and has financing in place to renovate them. The bank is hunting for more properties—in Greece and elsewhere—and developing a brand that it could use to unite them, according to people familiar with its plans.

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