The Social Security Administration (SSA) announced Wednesday that nearly 70 million recipients will see a cost-of-living adjustment (COLA) of 5.9% in 2022, the biggest increase since 1982. SSI recipients will start receiving their first increase on December 30. , 2021. Regular Social Security beneficiaries will see their first check in January 2022.
This year’s jump is more than 4.5 times last year’s growth of 1.3%. The difference is visible in the projected increase in monthly benefits. A 1.3% increase in 2021 resulted in an average increase in monthly benefit checks of only $20. This year’s 5.9% COLA average recipient will receive $92 per month, or more than $1100 in 2022. The last time beneficiaries saw such a large COLA was in 1982 when the increase was 7.4%.
- The 2022 Social Security COLA will be 5.9%, the highest in nearly 40 years.
- The average recipient will see a monthly increase of $92 through 2021.
- While the upcoming COLA helps offset the 2021 5.9% growth in the CPI-W, it is subject to further erosion in 2022 from rising inflation.
- 2022 Medicare rates, which are expected to come out in November, could further reduce the impact of this year’s increase.
Unfortunately, when Social Security COLAs see a huge increase, it means inflation is on the rise as well. After all, Social Security COLAs have been linked to an increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)—specifically, a COLA was provided for the third quarter from the third quarter of the previous year. current year. In simple words, if there is no inflation, there can be no COLA.
In fact, the CPI-W rose 5.9% over the prior year, resulting in a 5.9% COLA for Social Security recipients. Although many see the effects of last year’s inflation as its “lifting,” the system does what it’s designed to do — prevents inflation from taking away value from Social Security benefits. Of course, if inflation continues to rise, this will reduce the purchasing power of the 5.9% increase. The Conference Board research group has forecast inflation for 2022 to be between 2.8% and 3.0%.
Medicare Rates Payable in November
Although the cost of 2022 Medicare Part B premiums is not expected to be released until November, the Medicare Trustee in its August 2021 annual report estimated next year’s Part B premiums to be $158.50, which is $10 more than the 2021 monthly premium amount. Will happen.
Since Medicare premiums are usually deducted from Social Security benefits, any increase in Part B premiums lessens the impact of any COLAs. Most retirees don’t pay premiums on Part A (hospitalization) premiums, but those who do make an increase will have the same effect. Other medical costs, including deductibles, are also subject to increase on an annual basis.
Additional Social Security Changes for 2022
On top of the 5.9% benefit increase for 2022, Social Security recipients will see the following additional changes beginning in January 2022:
- The maximum income subject to Social Security tax will increase from $142,800 to $147,000 in 2021.
- The maximum earnings before those working under full retirement age can receive a benefit reduction will be $19,560 in 2022 versus $18,960 in 2021.
- The maximum Social Security monthly benefit for a worker who retires at full retirement age in 2022 will increase from $3,148 to $3,345.
- The average Social Security benefit paid in 2022 rose to $1,657 from $1,565 last year.
- Disabled workers will also see an increase from $1,282 to $1,358 per month.
- It now takes $1,510 to earn a single Social Security credit, which is only $40 more than in 2021.
things that won’t change
- Social Security tax rates are the same for 2022: 6.2% on employees and 12.4% on the self-employed.
- Individuals with an earned income of more than $200,000 ($250,000 for married couples filing jointly) will continue to pay an additional 0.9% in Medicare taxes.
When will I get my first Social Security check with the new increase of 5.9%?
Their first payment to SSI recipients will start from December 30, 2021. All others will receive their payment in January 2022 on their regular payment day.
How Much Will the 2022 Medicare Part B Premium Be?
Official notification is expected in early November 2021, but CMS Trustees indicated in August that the new premium would be around $158.50, up $10 from last year’s premium.
How much will it cost to earn one-fourth of the coverage under Social Security in 2022?
A quarter of coverage will cost $1,470 to $1,510 in 2022.