When does COLA 2022 take effect in Social Security Benefits? How to calculate your amount
Thanks to the 5.9 percent COLA increase for 2022, Social Security recipients will see their monthly benefits increase. Here is how to calculate it.
Social Security recipients have seen the purchasing power of their monthly benefits eroded over the past few decades, especially with exceptionally high inflation in 2021. Relief, to some degree, is on its way after the Social Security Administration (SSA) announced on 13 October that in 2022 those receiving benefits from the agency, including Social Security, Supplemental Security Income, and more, would see a 5.9 percent increase reflected in their check.
The agency calculated the 2022 Cost-of-living adjustment (COLA) by looking at the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for July, August, and September. The increased payments will begin with checks the go out for January 2022.
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2022 COLA highest in decades
The increase makes history as the highest offered to seniors in over forty years and is mostly a result of higher than normal inflation brought on by multiple factors resulting from the covid-19 pandemic.
The Senior Citizens League, an organization that advocates for seniors in the United States has noted that over the last few decades the COLAs applied to social security benefits have not kept up with actual price increases in the market. The annual boost to monthly payments will help go some way toward keeping seniors and disabled recipients from losing purchasing power. However, much of this increase is likely to be offset by similar rises in costs of goods and Medicare. For that reason, the Senior Citizens League has called on Congress to send a $1,400 stimulus check to those on social security.
In 1982 the recipients saw a 7.4 percent bump in their monthly entitlement. Back in the late 1970s and into the 1980s high inflation was the norm, but over the decades it has been tamed
The COLA is not usually so large, but the high inflation for 2021 means payments need to match it, or seniors will fall into poverty. One of the big reasons for the high inflation is the increase in gas prices. The US has been pushing for Gulf states to increase their oil output in an attempt to arrest the cost of gas. This has also been keenly felt in Europe, leading to soaring electricity costs in Spain and the United Kingdom.
When will the hike to Social Security benefits take effect?
The SSA has stated that around eight million beneficiaries will receive their first check with the COLA applied on 30 December 2021. More than 64 million Social Security beneficiaries will see their higher payments starting in January based on the Social Security Administration’s payment schedule.
Why was the COLA so high for 2022?
The covid-19 pandemic has caused many economic problems. One of the most pervasive is supply chain issues that are leading to a surge in prices. Inflation is up more than six percent over the last year, and for that reason, the COLA is the highest in decades.
Consumer prices increase 6.2 percent for the year ended October 2021 https://t.co/2Gd6YaeTZV #BLSdata pic.twitter.com/EzuVUbZpry
— BLS-Labor Statistics (@BLS_gov) November 21, 2021
How to calculate your benefit
The easiest way to calculate your benefit is by taking your monthly payment and multiplying it by 5.9 percent. That will give you the increase you will see reflected in your check. To find out the total of the new check, apply the increase to the previous amount.
Additionally, in December, the SSA will be sending out letters to beneficiaries detailing exactly how much their benefits will increase.
One thing to keep in mind is that the price of the Medicare Part B premium will increase from $140.50 to $170.10. The increase of $29.60 will be taken directly out of one’s social security checks. Meaning that whatever increase is added to the benefit amount, will be $29.60 lower than what appears.