Based on the changes this year so far, an increase could be 4% in 2022. If this is the case, then the increase might be the biggest since 2008, when enrollees got a 5.8% boost in their retirement income.
How annual increases work
Social Security does not analyze the spending of retirees. Instead, they decide to increase payouts in relation to the annual price changes of certain goods and services by watching the CPI (Consumer Price Index) for Urban And Clerical Workers (which is called CPI-W).
The monthly CPI-W for Q3 of the current year are measured against the Q3 numbers from the previous year in which Social Security increased its payout.
For example, if there was not a boost given in the previous year, but there was one given two years back, then the current year would be measured against the numbers from the numbers of two years ago.
How’s it looking for 2022?
It’s too soon to say to a certainty, but CPI-W is obviously higher in 2021 than it was during 2020. If that trend keeps going in the third quarter, then S.S. recipients might be in store for their largest pay raise in over ten years in 2022.
CPI-W data was available through the month of May of 2021. The CPI-W was measured at 4.4% higher in the three-month time period from March through May compared to the same time period in 2020. If this was Q3 data, then the 4.4% boost in Social Security payments could be significantly greater than any increase recipients have gotten in years due to the average S.S. increase over the previous five years only being 1.6%.
Author: Blake Ambrose