Washington – Millions of retirees on Social Security will get a 5.9% increase in benefits for 2022. The biggest cost adjustment in 39 years follows an explosion in inflation as the economy struggles to overcome the drag of the coronavirus pandemic.
COLA, as it’s commonly called, amounts to $92 per month for the average retired employee, according to estimates released Wednesday by the Social Security Administration. It marks a sudden break from a long lull in inflation, which saw an average cost of living adjustment of only 1.65% per year over the past 10 years.
With the increase, the estimated average Social Security payment for a retired employee would be $1,657 a month over the next year. A typical couple’s benefits would increase from $154 to $2,753 per month.
“It goes by very quickly,” said retiree Cliff Rumsey as he saw the cost of living rise. After a career in sales for a major steel manufacturer, Rumsey lives near Hilton Head Island, South Carolina. He takes care of his wife of nearly 60 years, Judy, at home, who has been diagnosed with Alzheimer’s disease. Since the coronavirus pandemic, Rumsey said she referred to rising prices for food, wages paid to caregivers, who sometimes referred to personal care products for her and Judy, Energy Not to mention the cost.
File image – Marks the entrance to the Social Security Administration’s headquarters located on Security Boulevard on January 11, 2005 in Baltimore, Maryland. (Photo by Dennis Brack/Businesshala via Getty Images)
COLA affects the household budget for 1 in 5 Americans. This includes Social Security recipients, disabled veterans and federal retirees, about 70 million people. For baby boomers going into retirement within the past 15 years, this will be the biggest increase they’ve ever seen.
“It’s welcome,” said Mary Johnson, an analyst with the non-partisan Senior Citizens League advocacy group. “But what we’re hearing is that even with cola, purchasing power will still decrease because price increases are still going up.”
Policy makers say COLAs were designed as a safeguard against loss of purchasing power in an ever-changing economy to protect Social Security benefits, not a wage increase for retirees. About half of senior citizens live in households where Social Security benefits provide at least 50% of their income, and one-quarter depend on their monthly payments for all or almost all of their earnings.
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