Spike will increase retirees’ monthly payments from $92 to an estimated average of $1,657 for 2022.
“This will be the highest COLA most beneficiaries living today have ever seen,” said Mary Johnson, Social Security and Medicare policy analyst for the Senior Citizens League.
In 2021, the adjustment was 1.3% – which translated into an increase of about $20 a month For retired employees. According to the league, over the past 12 years, Boost has averaged 1.4%.
After decades of insufficient growth, the 2022 boost is finally more closely matched by rising costs to beneficiaries, said Nancy Altman, president of Social Security Works, an advocacy group.
“But as big as it may appear on paper, it is not enough for seniors and people with disabilities on fixed incomes,” she said.
Some 40% of beneficiaries rely on monthly checks for at least 90% of their income, and two-thirds of recipients rely on payments for at least half of their income.
According to a recent study by The Senior Citizens League, annual growth has not kept pace with rising costs of goods and services commonly used by retirees. It noted that it has received more than 200 emails in the past month, with many retired and disabled senders saying rising inflation is making it impossible for them to pay their bills.
Social Security benefits have lost 32% of their purchasing power since 2000, advocacy group finds. Annual adjustments increased payments by 55% overall, but typical expenses for senior citizens increased by about 105% during the same period.
According to AAA, the national average price of gasoline reached $3.27 a gallon on Monday. This is the highest in seven years and is almost double the price in April 2020.
Johnson said housing costs have risen by about 118% since 2000 and health care costs have increased by 145%. He said that these two categories are not adequately accounted for in the annual adjustment.
Social Security’s cost of living adjustment is based on the Consumer Price Index for urban wage earners and clerical workers, known as the CPI-W. This is slightly different from the wider and better known Consumer Price Index for all urban consumers.
Medicare Part B premiums, which are usually deducted from Social Security checks, are also expected to rise significantly next year. Medicare’s trustees estimated in August that the standard monthly premium for 2022 would increase by about 6.7%.
This is a year earlier than was reported in 2020 because of the pandemic, which has reduced the number of workers paying Social Security tax. But the long-term impact of COVID-19 on trust funds is unclear.
The maximum income subject to tax will increase to $147,000 for 2022, up from $142,800 this year.
This story has been updated with additional background information.