After years of meager increases to their Social Security checks, older Americans will likely get the equivalent of a big raise next year.
The 68 million people – including retirees, people with disabilities and others – who depend on benefits are likely to receive a cost of living adjustment from 6% to 6.1% next year due to a hike inflation linked to COVID-19, according to the League of Seniors.
Such an increase would far exceed the average 1.4% increases in social security payments since 2010 and represent the largest increase since 1982, according to the Senior Citizen League.
For the average retiree who received a monthly check for $ 1,559 this year, a 6% increase would increase that payment from $ 93.54 to $ 1,652.54 in 2022.
Next month, the Social Security Administration will announce its cost of living adjustment (COLA) for 2022 based on average annual increases in the Consumer Price Index for urban and office workers, or CPI- W, from July to September. The CPI-W largely reflects the general CPI index that the Ministry of Labor reports monthly.
The Senior League predicts the increase based on changes in the IPC-W over the past year. But inflation has been volatile recently. Overall, prices rose 5.4% per year in June and July, a 13-year high. But inflation edged down to 5.3% in August, the Labor Department said Tuesday, as hotel and air fares declined.
Those prices rose as the nation emerged from the pandemic and Americans began to travel again, but Federal Reserve officials said they believed the spike was temporary.
Income and poverty both decrease:Poverty fell last year amid COVID-19 pandemic as government lifelines helped ease job losses
As a result, the actual cost of living increase announced by the SSA next month is somewhat of a moving target and could drop to 5.9%, but probably not much lower, says Mary Johnson, policy analyst for the SSA. Senior Citizens League.
The high COLA estimate for next year is mainly due to rising gasoline and transportation costs which pushed up the CPI, Johnson said.
“This benefits retired and disabled beneficiaries of the COLA payable in January 2022,” Johnson said. “That hasn’t been the case for most of the past 12 years, when cheap gasoline and other falling prices brought COLA down.”
Johnson argued that the overall index should better reflect the spending habits of older people, who buy less gasoline, electronics and other products that make up a larger portion of the budgets of younger workers.
She called on the SSA to base its COLA on a proposed index for the elderly that would place more weight on medical, food, shelter and other expenses that have risen more sharply.
The hiring wave:Amazon announces plans to hire 125,000 employees across America