The most significant Social Security payment increase in 40 years will happen in 2022. Social Security payments will increase by 5.9% beginning January 2022. This is the most sizable Cost-of-Living Adjustment (COLA) since 1982.
The increase was determined by measuring the annual change in CPI-W. According to the Labor of Bureau Statistics, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is a monthly measure of the average change over time in the prices paid by urban wage earners and clerical workers for a market basket of consumer goods and services.
69 million Americans receive some form of Social Security benefits. The average Social Security benefit was $1,543 per month in January of 2021. With this increase, the average will be $1,634 per month in January of 2022.
The net payment after accounting for Medicare premiums may feel like individuals are getting less than a 5.9% increase. That’s because the Medicare Part B premium is scheduled to go from $148.50 to $158.50, which represents an 11% increase.
The increase in Social Security benefits will help offset the higher cost of goods and services that many retirees are facing in 2021 and beyond. What’s uncertain is whether this higher level of inflation will continue into 2022. Ideally, for those on Social Security, inflation needs to return to pre-2021 levels to allow for more disposable income.
For more information on Syverson Strege’s outlook on inflation, please read Jason Gunkel’s article on inflation.
If you have any questions, please contact us at 515-225-6000.