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Published: Sep 16, 2021 10 min read
A retiree's beach chair that is in the shape of an upward arrow (representing inflation)
Kiersten Essenpreis for Money

The cost of everything is rising, from groceries to gas.

The reopening of the economy means that consumers are finally spending more money on goods and services, driving inflation up to 5.3% in August compared to a year earlier. In late August, the Office of Management and Budget said it expected consumer prices to jump 4.8% in the fourth quarter from a year earlier, more than double the Biden administration's May forecast.

These high numbers mean Social Security recipients can expect a bigger-than-average boost to their benefit next year. The Senior Citizens League is predicting a 6.0% to 6.1% cost-of-living adjustment for 2022, and while that might come as welcome news, it's too late to help the millions of retirees who have been coping with this year's price increases on the meager, 1.3% raise they got for 2021.

If you’re planning to retire soon, all this inflation talk could have you spooked. Here’s what you need to know.

Is inflation here to stay?

Some Republican lawmakers blamed the Biden administration for the rising prices, saying that high government spending under President Joe Biden and Democrats led to the surge in inflation. But economists and Federal Reserve Chair Jerome Powell pushed back, arguing that high prices were due to supply chain issues that will eventually be resolved. What's more, since prices in categories like travel fell so much when the pandemic hit, the inflation figures in those categories look disproportionately larger now that they've rebounded with the economy.