Story at a glance
- Around 70 million Americans who receive Social Security could get larger checks starting next year, one advocacy group estimates.
- The increase in benefits could be the result of an 8.7 percent COLA, or cost-of-living adjustment, to keep up with inflation.
- The Social Security Administration is expected to announce the actual COLA next month after September consumer price data is released.
Social Security recipients may get bigger checks next year.
Around 70 million Social Security recipients may receive an 8.7 percent COLA next year, according to Mary Johnson, a Social Security and Medicare policy analyst at the bipartisan advocacy group Senior Citizen League.
Such a large COLA, or cost of living adjustment, is rare and would result in the largest increase since 1982.
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The Social Security Administration determines its COLA for the next year based on average annual increases in the consumer price index for urban wage earners and clerical workers, which are calculated monthly by the Bureau of Labor Statistics.
The average retired person receives a Social Security check of $1,656 a month. After applying a COLA increase of 8.7 percent the average check would then increase by $144.10, according to Johnson.
To calculate their prospective increase, Social Security recipients can take their gross benefit amount and multiply it by 0.087, The Senior Citizen League recommends.
The increase is being made to help recipients whose Social Security has not changed to address inflation. In June, inflation in the United States hit a 40-year high with consumer prices jumping by 9.1 percent.
Prices fell a bit in August but remained high — 8.3 percent more than last year — as the cost of food, medical care and rent continues to go up.
Due to inflation, the COLA average Social Security check of $1,656 a month has fallen short by about $43.80, Johnson added.
The Social Security Administration is expected to release the final adjustment on Oct. 13 after the release of this month’s inflation data.
Cost-of-living adjustments for social security first started in 1973 to help benefits to keep up with the pace of inflation. Without a COLA, social security funds have less buying power, which can create financial hardships, particularly for the elderly.
Almost 60 percent of respondents to a Senior Citizens League retirement survey said they think they will face a higher tax liability in 2022 because of this year’s 5.9 COLA. Out of those retirees, 21 percent admitted worrying that they will have to pay taxes on a portion of their Social Security benefits for the first time.
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Published on Sep 14,2022