Come 2022 Your Social Security Check Will Go A Lot Further

Come 2022 Your Social Security Check Will Go A Lot Further

The 2022 Cost of Living Adjustment (COLA) is the largest bump seen in nearly forty years.

It was indeed wonderful music to the ears of the roughly seventy million Americans who rely on Social Security benefits—as it was announced that there will be a 5.9 percent cost of living adjustment (COLA) for next year.

That sizeable increase, which will boost retirees’ monthly payments by approximately $90 to an estimated average of $1,657, is the largest bump seen in nearly forty years. For comparison, last year, the COLA only came in at 1.3 percent, which only gave an average of $20 boost to the monthly Social Security checks.

“This would be the highest COLA that most beneficiaries living today have ever seen,” Mary Johnson, Social Security and Medicare policy analyst for the Senior Citizens League, told CNN.

AARP CEO Jo Ann Jenkins noted in a statement that “the guaranteed benefits provided by Social Security and the COLA increase are more crucial than ever as millions of Americans continue to face the health and economic impacts of the pandemic.”

She continued: “Social Security is the largest source of retirement income for most Americans and provides nearly all income (90 percent or more) for one in four seniors.”

Inflation Risks

Despite the nearly six percent raise, steeper prices for food, gasoline, and medicine will likely continue to squeeze the pocketbooks of millions of elderly Americans. In the very worst of cases, some of the nation’s seniors have been forced to choose between medicine and food.

“Retirees have been pummeled by the rising cost of health care, and the CPI-W does not accurately reflect how much retirees are spending on health care,” Rhian Horgan, CEO of Silvur, maker of a retirement planning app, told USA Today.

Losing Purchasing Power

The meager annual increases over the past decades have done little to keep pace with the fast-rising costs of goods and services. In fact, since 2000, Social Security benefits have lost roughly thirty percent of their purchasing power due to adjustments that have underestimated inflation and rising health care costs, according to the Senior Citizens League.

This issue has become even more pronounced recently as more Americans rely solely on Social Security benefits to cover their financial needs during their golden years. According to the Social Security Administration (SSA), about twenty percent of married couples and forty percent of singles receive at least ninety percent of their income from the Social Security program.

“While the high COLA is welcome, we have received hundreds of emails from retired and disabled Social Security recipients who say that the low COLAs in recent years have not kept pace with their rising costs. That has made it more difficult for many to cope with the rampant inflation of 2021,” Johnson said.

“The COLA is paying for inflation from last year—not for future years,” she added.

Ethen Kim Lieser is a Washington state-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.

Image: Reuters