Will the Social Security increase in 2022 be $200?
The Social Security Administration is preparing to announce the 2022 COLA increase, with some saying it could boost benefits by more than $200.
In October, the Social Security Administration (SSA) will announce the 2022 Cost-of-Living-Adjustment, or COLA as it is more commonly known. The COLA, which is tied to the Consumer Price Index, aims to ensure that the purchasing power of those on Social Security is not impacted by the year-to-year price increase caused by inflation.
This year the increase is expected to be historic, with prices trending upward across many goods. While rumors have circulated that the COLA could be $200, the increases are calculated as a percent, not a sum of money.
The Senior Citizens League has projects that the increase could be as high as 6.1 percent while others put it closer to 5.8 percent. Regardless, even if the SSA announces a 6.1 percent COLA increase, the majority of recipients would not see a $200 increase.
How much is the average Social Security benefit?
For retirees, the average benefit seen was $1,534, while beneficiaries with a disability saw an average of $1,280 in June 2021. In dollars, a 6.1 percent increase would correspond to a bump in payments worth $93 and $78, respectively.
The maximum Social Security benefit paid out in 2021 was $3,895. For those receiving this heftier check, the increase would be $237.
When will the 2022 COLA be announced?
Based on releases from previous years, the public can expect an announcement by mid-October, after CPI data from September is available.
There are various Consumer Price Indices that track changes in prices for different goods and services. The standard CPI “measures the change in prices paid by consumers for goods and services. There is also CPI that focuses solely on consumers in areas, known as the CPI-U.
Lastly, the Bureau of Labor Statistics tracks a CPI for Urban Wage Earners and Clerical Workers. Those included in the CPI-U must meet two requirements: “more than one-half of the household's income must come from clerical or wage occupations,” and “at least one of the household's earners must have been employed for at least 37 weeks during the previous 12 months.”
Did the Consumer Price Index track an increase in July and August?
The CPI-W is the index used by the SSA to calculate the COLA increase each year.
From 2019 to 2020, the CPI-W increased from 250.200 to 253.412. This increase corresponded with a 1.3 percent COLA. The historic predictions for the 2022 COLA are based on the CPI-W data from July and August, where the CPI-U averaged 267; an increase of more than fourteen points, over levels recorded in the fourth quarter of 2020. Based on the rates from July and August, the COLA would be somewhere around 5.5 percent, but many assume that the September data will bump this figure up even further.