In 2022, retirees and other beneficiaries will see their monthly payments increase by a whopping 5.9% — the biggest hike in roughly 40 years. For comparison, 2021’s COLA was just 1.3%, and they have generally landed between 1% and 3% in any given year.
However, that doesn’t necessarily mean they’ll feel like they have more money to spend.
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The COLA is a cost-of-living adjustment the Social Security Administration releases to factor recent inflation into the size of beneficiaries’ monthly checks, giving them a shot at keeping up with rising costs. It’s one of the biggest perks of the Social Security program.
Each year’s COLA is a reflection of the inflation that occurred in the prior year. A bigger benefit boost only means that inflation has also increased more substantially, making the necessities of life more expensive. And while COLAs are intended to prevent benefits from losing buying power, by and large, they haven’t quite achieved that.
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On the SSS’s blog, they said, “Approximately 70 million Americans will see a 5.9% increase in their Social Security benefits and Supplemental Security Income (SSI) payments in 2022. Federal benefit rates increase when the cost-of-living rises, as measured by the Department of Labor’s Consumer Price Index (CPI-W).
The CPI-W rises when inflation increases, leading to a higher cost-of-living. This change means prices for goods and services, on average, are a little more expensive, so the cost-of-living adjustment (COLA) helps to offset these costs.”
Read more: Social Security COLA Benefits Reduced to 5.9% for 2022
But according to a report from the Senior Citizens League, Social Security benefit checks have lost 30% of their buying power since 2000 because the annual cost-of-living adjustments haven’t kept up with inflation as it has affected seniors’ real expenses.
After the COLA takes effect in January, the average retiree will receive around $1,657 per month — $92 more than the 2021 average benefit amount.
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Married couples who are both entitled to retirement benefits will receive around $2,753 per month, on average, and disabled workers will collect an average of $1,358 per month.
To find out just how much your benefits will increase, check your mySocialSecurity online account.
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