The Social Security Administration (SSA) announced recipients will receive a hefty 5.9 percent increase in their monthly benefits beginning in January 2022. The cost of living increase (COLA) is good news since the United States is suffering from crippling inflation, which is making it difficult for low-income seniors to afford necessities like food and heating their residences.
While it is the largest since 1982, it remains consistent with the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of last year. As COLAs typically reflect the health of the country’s economy, beneficiaries might fare better this year than they did last year when during the height of the pandemic. The formula for forecasting does not consider eventualities or surprises, which explains why the 2022 COLA is 4.5 times greater than last year’s increase of 1.3 percent.
Hopefully, contrary to the predictions of some economists, the economy will level out. Then, the 2022 COLA will help SSA beneficiaries cover life’s necessities. However, Medicare premiums will be announced in November, and prescription drug prices will continue to rise.
There are roughly 70 million Social Security recipients, including retirees, Americans with disabilities, and others. The average monthly benefits for retired workers will increase by $92, widowed moms with two kids will see another $178, and for disabled workers, their spouses, and one or more children, the COLA increase will add $133. Additionally, other disabled workers can expect an average of $76 monthly.
For those collecting social security benefits who have not reached full retirement age and are working, the maximum earnings allowance will be increased by $50 each month before their earnings become taxable at $1 for every $2 earned over the limit.
Written by Cathy Milne-Ware
Investopedia: 2022 Social Security COLA Highest in 40 Yrs; by Jim Probasco
CNN: Social Security recipients get 5.9% increase, but rising prices will offset the boost; by Tami Luhby
SSA: 2022 Social Security Changes Fact Sheet
AARP: Social Security COLA 2022: How Much Will Benefits Increase Next Year? By John Waggoner
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Inset Image Courtesy of Bruce Bortin’s Flickr Page – Creative Commons License