Social Security COLA will jump to highest increase since 1983

More than 64 million Social Security beneficiaries will get some measure of relief from inflation next year in the form of the highest cost-of-living increase in 39 years.

Benefits will rise by 5.9% in 2022 — an increase of $92 per month in average benefits for retired workers or $154 for a couple with both spouses receiving them — due to the sharp increase in the Consumer Price Index over the past 12 months, the Social Security Administration said on Oct. 13. The widely expected bump in benefits likely will not keep up with Medicare premiums and definitely won’t change the 21% cuts projected in 2034 without Congressional action.

Advocates for older adults applauded the news, even as they warned of the importance of the program to retirees faced with higher medical risks and costs during the coronavirus pandemic.

“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,” AARP Chief Executive Officer Jo Ann Jenkins said in a statement. Social Security acts as the biggest source of retirement income for most Americans, with one in four seniors relying on it for 90% or more, Jenkins noted.

“For the first time in decades, Social Security beneficiaries will likely get an adequate cost-of-living increase in 2022,” the progressive advocacy group Social Security Works tweeted after the announcement. “That increase is welcome, but it's not nearly enough. We need to expand Social Security and control health care costs.”

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In addition to retiree benefits, more than 8 million Americans will get the boost to their Supplemental Security Income. With its annual announcement of the COLA, the Social Security Administration included a fact sheet displaying the impact to benefits starting in January.

Among all retired workers, the average monthly benefit will climb to $1,657 from $1,565. For spouses both receiving benefits, the monthly checks will grow to $2,753 from $2,599. Widowed mothers and two children ($3,187); aged widowers alone ($1,553); disabled workers, their spouses and one or more children ($2,383); and all disabled workers ($1,358) will receive higher monthly benefits as well. On the other hand, the maximum amount of employee earnings subject to Social Security taxes will tick up to $147,000 from $142,800.

The COLA next year will outpace any since the days of higher inflation four decades ago. In 1983, beneficiaries received a 7.4% increase, which followed double-digit hikes in each of the previous three years. In the past decade, COLAs have come in at an average of just 1.65%, including only 1.3% last year, according to AARP.