Although Social Security is a long time part of America, the program has evolved. And one good change that has the possibility to show up in the short term is a big cost-of-living adjustment, also called a COLA.
COLAs are the yearly increases that seniors on Social Security get. They are not fully guaranteed, and there have been years when there were no boosts to benefits.
But 2022’s COLA might be Social Security’s biggest in decades. Here is what seniors should know.
A good windfall might happening soon
In past years, Social Security’s COLAs have not been much to think or write about. This year, seniors saw their benefits increase by only 1.3%. Last year, they increased by 1.6%.
But next year, they could see their incomes go up a lot more. Why? Social Security increases are connected to inflation, and based on the information that we have right now, there is cause to believe that benefits will go up by 6% or more next year.
Why do we not have an exact number? The reason is that COLAs are done based on Q3 data from the CPI for Urban Wage Earners and Clerical Workers (CPI-W). We now have that data from July and August, but we are missing the final piece to the puzzle — September’s information.
That information might be released shortly, though. Once it does, we will have an exact number that seniors can expect in 2022.
Should seniors be happy or concerned?
A big COLA is something Social Security beneficiaries might not be used to, and a 6% or higher COLA might seem to be good news. But let’s also not forget that the increase is looking so big is because the cost of living is going up for Americans.
Some of these cost increases might be hurting workers more than seniors. Gas-prices rising, as one example, are more likely to hit commuters’ funds than the wallets of retirees. But food costs could hurt Social Security receivers, and a big COLA might help these people, but in the end, seniors may not be further ahead financially.
Furthermore, once 2022’s COLA is unveiled, we’ll still need another piece of the puzzle — Medicare Part B details. Every year, there is a standard premium seniors give for coverage each month. Right now, it is $148.50. But that premium might rise next year, thereby eating away at seniors’ COLA.
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Author: Blake Ambrose