Social Security recipients should expect higher benefits
In 2022, roughly 70 million Americans can expect a 5.9% Increase in their Social Security benefits and SSI payments. Social Security beneficiaries can expect mailed COLA notices throughout the month of December.
Year-to-year, COLA increases are a reflection of inflation. Historically, increases in COLA are dependent on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). It’s no coincidence, then, that the CPI-W rose 5.8 percent over the 12 months leading into August 2021. This 5.8% increase in CPI-W conveys a higher cost of living or an increase in the price for goods and services. The COLA is a Social Security mechanism which helps offset this measured increase in price.
Over the past 10 years, the COLA has averaged out to a modest 1.7%. This 5.9% increase in COLA is the largest that beneficiaries have received since the 1980s and is inline with the 5.8% increase in 2008 during the “Great Recession”. The boost this year translates to a monthly distribution of about $92 to beneficiaries.
January 2022 will also usher in other changes based on the increase in the wage indices, including an increase the maximum amount of earnings that are subject to payroll tax.
As always, we will alert you to any changes that may impact your retirement strategy. Please reach out to us if you have any questions.
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