Correct the last year the increase in the Security benefits was higher.
Retired Americans who collect Social Security are soon going to get the biggest increase in their monthly payments in 40 years: A 5.9% increase in monthly payments from January 1.
The biggest increase in the cost of living adjustment for Social Security since 1982 is a bit of a double-edged sword, though. It is going up so much because of the fact inflation has been running at the highest rate for at least a decade and more.
Consumer prices climbed 5.4% in the 12 months since September last year.
If inflation tapers down next year, as the Federal Reserve predicts, seniors could get a small windfall. But if inflation stays high they won t benefit nearly as much.
Read: High inflation to last awhile, Fed s Bostic says, and it s no longer transitory Cost-of-living adjustments are based on formula corresponding to the consumer price index. The government made it official after the release of the CPI report in September.
The average Social Security beneficiary receives about $1,565 a month in this year. The scheduled 59% increase in 2022 would amount to $92 a month — or $1,104 extra over a full year.
That works out to $1657 a month for the average retired person.
Benefits rose just 1.3% in each of the prior two years, but inflation was also a lot lower. The annual COLA increase is meant to help seniors keep up with inflation.
Nearly 70 million people received Social Security or related benefits in 2021. That is about one-half of the population.
What you don t know about Social Security?
The annual cost of living increase is determined by taking the average rate of inflation from July through September and comparing it to the same period of three months a year earlier using an index known as CPI-W.