Social Security Benefits Increase by 5.9% in 2022

Social Security Benefits Increase by 5.9% in 2022

For those wondering whether Social Security will get a raise in 2022, there’s good news. The Social Security Administration recently announced a Social Security increase for 2022 of 5.9 percent. Here’s what this means for you.

Stephanie Faris

Published February 21st, 2022

Table of Contents

Key Takeaways

  • Social Security recipients will see an increase of 5.9 percent in 2022, thanks to the cost of living adjustment (COLA) that goes into effect in January.
  • The COLA is in response to increasing inflation, which is expected to continue into 2022.
  • In addition to an increase in the cost of living, retirees will also pay more in Medicare Part B premiums to offset rising medical costs.

If you rely on Social Security for part or all of your income, you know the value of a Social Security increase every year or two. Without a Social Security raise, the cost of living can quickly cut into the money you’re seeing deposited in your account each month.

For those wondering whether Social Security will get a raise in 2022, there’s good news. The Social Security Administration recently announced a Social Security increase for 2022 of 5.9 percent. Here’s what this means for you.

How Much Is A Social Security Payment in 2022?

Is Social Security getting a raise in 2021? If you receive Social Security benefits, you probably already know that recipients enjoyed a 1.3 percent increase in 2021. This was down slightly from the 2020 increase of 1.6 percent. In light of this, the SS payments 2022 Social Security COLA increase of 5.9 percent is a fairly huge jump, making it good news for those receiving benefits.

COLA, which “cost of living adjustment” is decided by the Social Security Administration after a careful look at the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The COLA 2022 Social Security increase is a direct reflection of the fact that prices have increased over the past year.

In 2021, the average Social Security payment was $1,555 a month for retirees, according to the SSA. Since 5.9 percent of $1,555 is $92, that can equate to an average monthly $200 Social Security increase 2022 for a household with two retirees.

How Do I Find My COLA Notice?

This year’s COLA raise will apply to more than 64 million Social Security beneficiaries and about 8 million Social Security Income (SSI) recipients. The SSI payments will begin Dec. 31, 2021, followed immediately by Social Security payments beginning in January 2022.

If you’re receiving Social Security, you’re automatically eligible for the COLA increase, just as you received the COLA 2021 increase. Although the same 5.9 percent adjustment applies to all Social Security recipients, you’ll get an individual notice with specifics as they apply to you.

To verify whether Social Security is getting a raise, you’ll just need to wait for that COLA notice. It will come in the mail, but you can also access it in the message center of your online Social Security portal. Both the notice you see in the mail and the message in your online portal will include your 2022 COLA projection in the form of an estimate of what your monthly payment will be. It will also state when Social Security payments will increase.

Is The 2022 COLA Increase Enough?

Social Security recipients see the increase as good news, and certainly a higher amount is always better. But the big question is, will the boost in your monthly payments be enough to cover your bills?

The problem with the Social Security and SSI raise is that the increase was in response to a significant rise in inflation. For the year ending September 2021, the Consumer Price Index saw an increase of 5.4 percent, which is below the 5.9 percent COLA increase.

But the problem is, inflation isn’t grinding to a halt as 2021 nears its end. In fact, experts expect inflation to continue to climb as 2022 begins. Additionally, retirees will see an increase in Medicare premiums, with the Congressional Research Service estimating Part B premiums will rise from $148.50 to $157.70 monthly.

One of the biggest areas seeing an increase going into 2022 is housing. For retirees with homes that are paid off, this might not be as much an issue. But those who rent their homes have been facing steep increases in recent months. Homeowners will deal with rising property taxes due to increasing home values across the country, which will likely cut into that Social Security check.

Another complication is that the Consumer Price Index looks specifically at wage earners. This leaves out the unique spending habits of Social Security recipients. With most of those on Social Security being retirees, the rising costs of medical care and health insurance impacts that group far quicker than those who are still in the workforce, so the COLA increase might not be able to keep up with the actual cost of living.

Brief History of COLA Increases

As you review what the Social Security and SSI increase 2022 will bring, you may wonder where this year’s raise falls. The 5.9 percent increase is the largest one since 1982, which was during a time when hefty increases were common. However, the 2008 increase of 5.8 percent came close. In response to the economic turbulence at the time, Social Security recipients saw a boost, but it was followed by two solid years of no COLA increases.

When you look back, asking did Social Security get a raise like this in previous years, you’ll see fairly steady COLA increases from 2017 to 2020. In December of last year, Social Security recipients enjoyed a 1.3 percent increase.

The Social Security Administration has a complete history of COLA increases, dating all the way back to the first one in 1975. Prior to the launch of COLA, Social Security increases were set by legislation, so there was no process in place to match the cost of living to the amounts people were receiving each month.

Final Thoughts

Knowing that Social Security payments are increasing 5.9 percent will make it easier to gauge your projected Social Security COLA for 2022. If you haven’t already, Retirable recommends working with a certified financial planner to come up with a budget that will help you weather cost of living increases over the years you’re enjoying your retirement.

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Author

Stephanie Faris

Stephanie Faris has written about finance for entrepreneurs and marketing firms since 2013. She spent nearly a year as a writer for a credit card processing service and has written about finance for numerous marketing firms and entrepreneurs. Her work has appeared on Money Under 30, The Motley Fool, MoneyGeek, E-commerce Insiders, and GoBankingRates.

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