Social Security Benefits to Increase 5.9% for 2022

Seniors and different Americans receiving Social Security advantages in 2022 will see the most important enhance of their funds in 4 many years, reflecting surging inflation throughout the pandemic.

Next yr’s cost-of-living adjustment, or COLA, will likely be 5.9%, the Social Security Administration mentioned Wednesday. The enhance will translate to an addition of $92 to retirees’ common month-to-month profit subsequent yr, bringing the quantity to $1,657, the company estimates.

The almost 6% cost-of-living adjustment is the most important since 1982, in accordance to Social Security Administration knowledge. The adjustment is calculated based mostly on the Labor Department’s measure of inflation confronted by blue-collar staff.

The Labor Department mentioned its broader measure of inflation, the consumer-price index, rose 5.4% in September from a yr earlier, the most important annual acquire since 2008.

The Social Security Administration additionally mentioned the utmost quantity of earnings topic to the Social Security tax will enhance to $147,000 in 2022 from $142,800 this yr, a 2.9% enhance.

The extent to which the larger-than-usual Social Security adjustment makes retirees’ and different recipients really feel extra effectively off will largely rely upon whether or not inflation eases subsequent yr in contrast with 2021, mentioned Naomi Fink, a retirement economist at Capital Group, an funding supervisor.

The Social Security Administration annually bases its cost-of-living adjustment on the Labor Department’s consumer-price index for city wage earners and clerical staff.


John Nacion/Zuma Press

Consumer costs have risen on the quickest charge in additional than a decade this yr as a result of trillions of {dollars} in financial stimulus have supported shopper demand at a time when provides for the whole lot from bathroom paper to new automobiles have been constrained due to pandemic disruptions.

“If price rises turn out to be fleeting and reflect temporary supply shocks and they subsequently show much more modest rises in 2022, then that would be quite positive for those that got that windfall cost-of-living adjustment,” mentioned Ms. Fink, who added that situation might place Social Security recipients to enhance consumption.

“If in 2022 we see equal or even greater price rises and revisions to long-range inflation forecasts, it’s a different picture,” she mentioned.

Federal Reserve Chairman

Jerome Powell

and different Fed officers have mentioned they count on elevated inflation to be non permanent and to ease as frictions related to the financial system’s reopening fade. Mr. Powell instructed lawmakers just lately that it was tough to pinpoint when that cooling in inflation may occur.

“Higher prices are generally not good for people who are living on fixed incomes,” mentioned David Certner, legislative counsel at AARP. “Social Security may have a cost-of-living adjustment, but most other income sources that seniors may have—for example, pension income—are not adjusted for inflation. So even if Social Security is keeping up with inflation, it may very well be that other sources of income are not.”

About 1 / 4 of seniors 65 and older relied on Social Security advantages for 90% or extra of their earnings in 2019.


Bradley C Bower/Associated Press

Roughly half of Americans aged 65 and older relied on Social Security for 50% or extra of their earnings in 2019, in accordance to an AARP evaluation of Census Bureau knowledge. About 1 / 4 of seniors 65 and older relied on the advantages for 90% or extra of their earnings, the evaluation discovered.

Mr. Certner mentioned that objects seniors have a tendency to buy extra incessantly, similar to medical care and prescribed drugs, typically have prices that devour a good portion of the annual cost-of-living enhance.

Medicare’s trustees in August projected the usual 2022 month-to-month premium for Medicare Part B, which covers physician visits and different varieties of outpatient care, would enhance by $10 to $158.50. That would devour round 11% of the rise in retirees’ common month-to-month Social Security advantages.

Kathy Dykstra, of St. Clair Shores, Mich., retired in January from her function as a special-education instructor. Ms. Dykstra, age 63, mentioned she had supposed to retire between age 65 and 67, however the stresses of her job throughout the pandemic prompted her to cease working sooner than deliberate.

“The demands were just really, really, really hard. So I ended up choosing my mental health over all the expectations,” she mentioned.


Do you suppose bigger Social Security checks will do sufficient to offset greater inflation? Why or why not? Join the dialog under.

Ms. Dykstra mentioned she now lives on an earnings of roughly $1,700 a month, $1,100 of which comes from Social Security, in contrast with about $3,200 month-to-month when she was working.

She mentioned she has seen greater costs just lately, significantly for fuel and groceries. Those will increase, mixed along with her decreased earnings, have made her choosier about how she spends her cash, she mentioned. For occasion, Ms. Dykstra would dine out two to thrice every week when she was working, however now does so as soon as every week or each two weeks.

“At the point I’m at right now, any increase would be just wonderful. It really is down to budgeting every dollar that I have,” she mentioned of the approaching Social Security adjustment.

Among those that obtain advantages are aged Americans, these with disabilities and minor kids and spouses of recipients who’ve died.

The Social Security Board of Trustees in an August report mentioned the belief fund that pays advantages is projected to grow to be depleted by 2034, a yr sooner than estimated in 2020. At that point, Social Security earnings could be enough to pay about 78% of scheduled advantages.

Anqi Chen, assistant director of financial savings analysis at Boston College’s Center for Retirement Research, mentioned her tough calculations present that 2022’s cost-of-living adjustment might transfer up that depletion date by about three months, given its larger-than-normal dimension. The figuring out issue will likely be how shortly general wages paid to U.S. staff rise relative to the adjustment, Ms. Chen mentioned, since payroll taxes fund this system. Average hourly earnings for private-sector staff rose roughly 4.6% in September in contrast with a yr earlier, in accordance to the Labor Department.

“If wages are not increasing at the same rate as inflation in a given year, then what’s going in is going to be increasing less than what’s going out in benefits,” Ms. Chen mentioned. “That’s when you get the mismatch.”

Write to Amara Omeokwe at

Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Read Original Content Here

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top