Why is this Social Security Increase Unique and What Implications Does it Have for 2022?

The Social Security announcement is big news! It is quite rare to see a large amount like this. In 1975, Congress initiated the automatic annual COLAs. This is the biggest Cost of Living Adjustment since 1983 when it was 7.4%. In fact, there were three years that the benefits hadn’t been raised at all!  In contrast, in 2021 the increase that went into effect was 1.3%.

The COLA amounts depend on the CPI-W (Urban Wage Earners and Clerical Workers) official measure of the monthly price change in a range of goods and services that include food, energy and medical care. Higher prices are a real challenge for retirees since many rely on Social Security for their main source of income. If inflation continues to rise next year, the increase may not be enough, especially if pensions and other sources of income are not adjusting for inflation. However, if it recedes it will give the Social Security recipients the ability to increase their purchasing power. 

It is also important to note here that the Plan B Medicare prices have still not been determined.  Most of the time these Medicare premiums are deducted from the recipients Social Security benefit payments. Hopefully, the Medicare part B deductions won’t completely offset the increases.  For more detailed information please read the coverage here from The Wall Street Journal:  https://www.wsj.com/articles/social-security-cola-increase-2022-11634067648?mod=djemalertNEWS