With inflation on the rise, Social Security recipients will get a raise next year. The question is, how much?
The latest estimate from The Senior Citizens League, an advocacy group, predicts a cost of living adjustment (COLA) of between 6% and 6.1%. The estimate came as the latest consumer price index data was released Tuesday.
The increase will be reflected starting in January 2022. An increase within the predicted range would be the largest since 1982, when the COLA was 7.4%.
The government bases the COLA on the CPI, a measure of inflation, through September. Mary Johnson, Social Security policy analyst for The Senior Citizens League, says there is one more CPI report before the government officially announces the increase in October.
“This year is particularly difficult to forecast with certainty,” Johnson said. “The inflation patterns, caused in large part due to the COVID-19 pandemic, were unprecedented in my experience.”
While a 6% increase in monthly payments would no doubt be welcome news for seniors, Paul, of Ardara, Pennsylvania, notes that Social Security recipients don’t always reap the gains of a benefit increase because Medicare premiums are deducted from Social Security payments.
“Cost of Medicare needs to stop increasing every year after they increase your Social Security,” Paul wrote in a review of Aetna dental insurance. “The people lose every time.”
Inflation may have peaked
Johnson said it is likely the Social Security benefit increase will be at the low end of the projection because inflation appears to be moderating. But she says there is little doubt Social Security recipients will receive a larger benefit increase than they did in 2021.
“Higher gasoline and transportation prices in particular are behind the high COLA estimate for 2022, because those expenditures are given greater weight or importance in the consumer price index that’s used to calculate the COLA,” Johnson said. “That works to the advantage of retired and disabled beneficiaries for the COLA payable in January of 2022.”
Since 2010, COLAs have averaged just 1.4%. Inflation was so low that no COLA was payable at all in 2010, 2011, and 2016. In 2017 the COLA was almost zero, at just 0.3%.