Social Security benefits to increase by 5.9% in 2022

Texas News Today

Elderly people and other Americans receiving Social Security benefits in 2022 will see the biggest increase in payments in 40 years, reflecting the rise in inflation during the pandemic.

According to the Social Security Administration, next year’s cost of living adjustment (COLA) will be 5.9%. This increase represents an additional $92 of the average monthly benefit for retirees next year, which is $1,657.

The adjustment of about 6% of living expenses is the largest since 1982, according to Social Security Administration data. The adjustment is calculated based on the inflation indicators of the Ministry of Labor faced by blue-collar workers.

The Social Security Administration also said that the maximum amount of revenue subject to the Social Security tax would increase from $142,800 this year to $147,000 in 2022.

Naomi Fink, retirement economist at Capital Group, said next year’s inflation will subside to such an extent that retirees and other beneficiaries will be more energized with higher Social Security adjustments than expected. He said that it largely depends on whether he does it or not. manager.

The Social Security Administration adjusts living expenses for the city’s wage earners and clerical workers each year based on the Labor Ministry’s Consumer Price Index.

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John Nation / Zuma Press

Consumer prices are rising at the fastest rate in more than a decade this year as trillion-dollar economic stimulus supported consumer demand, when the turmoil of the pandemic killed everything from toilet paper to new cars. Supply was restricted. did.

“If the price increase turns out to be temporary and reflects a temporary supply shock, and then shows a much more modest increase in 2022, it will make such adjustments to the cost of living. It is very positive for those who get it,” Fink says. Those who embody that scenario can position Social Security recipients and increase their consumption.

“If we see price increases and revisions equal to or greater than our long-term inflation forecasts in 2022, that’s another situation,” she said.

Federal Reserve Board Chairman Jerome Powell and other Federal Reserve boards said they expect inflation to rise temporarily and that friction will ease as the economy restarts. Powell recently told lawmakers that it was difficult to decide when inflation would calm down.

AARP legislative adviser David Sertner said: “Social Security may have adjustments in living expenses, but most other sources of income that older people may have, such as pension income, are not inflation-adjusted. Security. Is facing inflation, but other sources of income may not pick up pace.”

Nearly a quarter of older people age 65 and older relied on Social Security benefits for more than 90% of their 2019 income.

Photo:
Bradley C. Bauer / The Associated Press

Nearly half of Americans over the age of 65 relied on Social Security for more than 50% of their 2019 income, according to an AARP analysis of Census Bureau data. According to the analysis, nearly a quarter of veterans aged 65 and over relied on benefits for more than 90% of their income.

Sartner said the items that older people buy more often, such as medicine and prescription drugs, often cost a significant portion of the annual increase in their living expenses.

For Medicare trustees in August, Medicare Apartment B’s standard 2022 monthly premiums, which cover doctor consultations and other types of outpatient treatment, rose from $148.50 this year to $158.50 to $10, or approx. expected to grow by 7%. This would cost about 11% of the expected increase in average monthly Social Security benefits for retirees.

Cathy Dykstra of St. Clair Shores, Michigan, retired from her role as a special education teacher in January. Dykstra, 63, said she intended to retire between the ages of 65 and 67, but because of the stress of her work during the pandemic, she quit her job earlier than planned.

“The demands were really, really, really tough, so I ended up choosing mental health over all my expectations,” she said.

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Dykstra said she now lives on about $1,700 a month, compared to about $3,200 a month she made while working, of which $1,100 comes from Social Security.

She said she’s seen a rise in prices recently, especially for gas and groceries. She said that these increases, as well as the decline in her income, made her more selective about how she spends her money. For example, when he was working, Dykstra used to eat out a couple of times a week, but now he eats out once a week or once every two weeks.

“At the moment I am here, any increase would be great. It really all depends on the dollar budget I have,” she said of the upcoming Social Security adjustments.

Each year, the Social Security Administration adjusts their living expenses based on the Consumer Price Index, or CPI-W, of the Department of Labor’s urban wage earners and clerks. This is a slightly different indicator of inflation for working households, which is slightly different than for ordinary households. Overall CPI, or CPI cited. The adjustment is based on the difference between the average CPI-W index for the third quarter of this year and the corresponding period last year.

Benefit recipients include older Americans, people with disabilities, minor children, and the spouse of a deceased beneficiary.

The Social Security Council said in an August report that trust funds paying benefits are projected to expire by 2034, a year earlier than projected in 2020. At that point, the benefit of Social Security income is enough to pay out about 78% of the plan. .

Anki Chen, assistant director of savings research at Boston University’s Center for Retirement Studies, said that, according to her rough calculations, the 2022 cost of living adjustment will end, noting that the expected size will be larger than usual. This shows that there is a possibility of going forward about 3 months. As payroll taxes fund the program, the deciding factor is how quickly the total wages paid to American workers rises compared to the adjustment, Chen said. Rice field. According to the labor ministry, the average hourly wage of private employees in September increased by about 4.6% year-on-year.

“If wages are not increasing at the rate of inflation in a particular year, what is happening will be less than profit,” Chen said. “That’s when you get a mismatch.”

write to Amara Omeokwe ([email protected])

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