Retirees Could Get Their Biggest Social Security Raise in 40 Years
It looks like good news is on the way for people who receive Social Security benefits: Monthly checks are expected to get a historic boost in January 2022.
Recipients are looking at between a 6.0% to 6.1% increase in their monthly payments, according to The Senior Citizens League (TSCL), a nonpartisan group that releases regular estimates of Social Security cost of living adjustments (COLA).
That would be the largest Social Security increase since 1982, and it would be welcome given the high levels of inflation Americans are facing nearly two years into the coronavirus pandemic.
According to the Consumer Price Index, which TSCL uses to craft COLA predictions, prices for a wide range of goods in August were up by more than 5% compared to a year prior. Some purchases are up significantly more than that – prices for new cars are up nearly 8% and used cars are up over 30% from a year ago. Although the Federal Reserve and other experts believe the increases are temporary, consumers are feeling the strain.
“In email after email, we are hearing that people are cutting their spending on prescriptions and groceries because that’s the last things they have left to cut,” Mary Johnson, Social Security policy analyst for TSCL said in a press release announcing the nonprofit’s latest COLA estimate.
For the 64 million people who claim Social Security, a 6% increase would be significant, but in many cases it won’t be enough.
Social Security alone is not enough to live on, despite what more than 25% of older Americans mistakenly believe. Those who think they'll be able to depend on the program alone to get by are likely already falling behind saving for retirement.
In order to help older adults who are struggling, TSCL is preparing to lobby Congress for an additional stimulus check specifically for seniors. The group is asking for $1,400 payments for Social Security recipients, and they say they’ll let Congress work out any details on who specifically would be eligible.
Years of low or even nonexistent COLAs have not kept pace with the growing expenses older adults in particular face. The COLA for 2021 was a mere 1.2%, yet the price of medical care services grew by 5% from 2020 to 2021, for example. Older adults are particularly hard hit by rises in medical care costs given that they spend a higher proportion of their income on healthcare than younger adults.
The Social Security Administration will release the official COLA for 2022 next month. It’s not expected to change significantly from TSCL’s current estimate, although inflation for the previous two months was lower than expected and may push the COLA down slightly, according to TSCL.
This year was “particularly difficult to forecast with certainty,” given the pandemic’s unpredictable effect on inflation, Johnson said in the release. “With the July and August consumer price data, inflation is plateauing.”
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