American retirees who have seen a meager increase in their Social Security checks over the past decade, and likely only a modest increase for their entire retirement, today received exciting news from the government: The Social Security Administration announced that the roughly 70 million who are on Social Security and Supplementary Insurance benefits will receive a Cost of Living Adjustment (COLA) of 5.9% for 2022 – the largest increase since 1982. For the average Social Security benefit check of $ 1,565, that would earn the recipient of that check an additional $ 92 a month .
The social security checks receive a cost of living adjustment each year, which the agency bases on changes in the consumer price index for urban wage earners and office workers (known as CPI-W). Over the past decade, the average annual adjustment has been 1.4%, thanks to unusually low inflation. But new data from the Labor Department predicts the CPI-W will rise 5.9% over the next year.
Trillions of dollars in business support spending supported consumer demand during the pandemic when personal finances became tight and supply chains for everything from toilet paper to iPhones were bottlenecked, leading to price spikes. If these increases level off again over the next year, the increase in social security benefits for seniors could prove substantial. However, should inflation continue so rapidly in 2022, analysts warn of a “different picture”.
The bad news is that many experts believe inflation will stretch through 2022. Meanwhile, most seniors are also likely to face an increase in their Medicare Part B premium of roughly the same amount – about 6% – which is about $ 10 more each. corresponds to month. For most seniors, Medicare premiums are automatically deducted from Social Security checks.
As a result, some older advocates are overwhelmed by the biggest social security surge in a generation. They argue that benefit recipients have lost a third of their purchases since 2000, citing statistics showing that the cost of living adjustment from social security administration has increased only half as fast as the real cost of seniors. Your argument, of course, boils down to a bigger struggle: that the CPI-W index is a terrible reflection of the true spending habits of retirees. They claim younger urban workers are buying more gasoline, electronics, and other things online. Seniors spend a disproportionate amount of their income on items that saw the worst price increases during the pandemic, such as food and medicine.