By Mary Johnson, editor
Rapidly climbing prices for consumer goods and services are making financial choices for older adults especially challenging this year. But eventually, these higher prices might mean a higher Social Security cost of living adjustment (COLA) for next year. In the meantime, older consumers are struggling to figure out how to pay for exploding costs right now — because the COLA for 2021 is just 1.3%.
Our current rising price problems got their start with the COVID-19 pandemic of 2020. Who can forget the shortages of toilet paper and paper towels? While those items are more readily available these days, they cost more than before the pandemic. And recently, a shortage of timber is driving up the cost of paper used to make these products, and now paper goods manufacturers are promising investors that they will raise prices again this year.
While that dings the monthly household budget, let’s talk about higher dollar items— such as appliance prices. A year ago, my old Whirlpool refrigerator gave out in the sweltering summer heat. The service call, parts, and labor were estimated to cost $868 to repair it. I balked. When I purchased this fridge, some models sold for less than that! So I naively opted to buy a new fridge.
Doing so in the middle of a pandemic was — complicated. Because I had to order online, I decided to get the same Whirlpool model because I really liked the one that I was replacing. But it cost considerably more (over 20% more) than my first one, and it was almost impossible to find at any price, despite it usually being a commonly available U.S. brand. My online order was immediately canceled — twice — due to the item being out of stock. After several attempts, I finally placed the order through the store management only to learn there was a three - month waiting period for delivery. There was a shortage of appliances due to supply chain disruptions caused by the pandemic, which drove up demand and prices of appliances.
But getting back to the COLA, rising prices these days, while being difficult to manage, could eventually mean a higher COLA in 2022. Based on data through April 2021, I estimate the COLA payable in January of 2022 will be 4.7%, making it the highest since 2009. But it’s still early and this estimate could change several times until the COLA is finally announced in October.
What sort of rising costs are you dealing with? Send me an email and share your story with all of us!