Social Security Increases Benefits by 5.9% for 2022

The Social Security Administration has announced a cost-of-living adjustment (COLA) to recipients’ monthly Social Security and Supplemental Security Income (SSI) benefits. More than 64 million Americans will see the 5.9% increase in their payments beginning in January 2022.

The increase, which is significantly higher than last year’s 1.3% adjustment, is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers, and was put in place to ensure the purchasing power of these benefits isn’t eroded by inflation.

According to the Social Security Administration, on average, retired workers currently collect $1,565 per month in Social Security payments, or roughly $18,780 per year. The 5.9% COLA will add about $92 per month to those payments, or $1,104 for the year.

The Social Security increase will be partially offset by the Medicare’s Part B increase.  Medicare’s Part B monthly premium for 2022 will increase by $21.60, the largest dollar increases in the health insurance program’s history, the Centers for Medicare & Medicaid Services (CMS) announced on Nov. 12. Standard monthly premiums for Part B will cost $170.10 in 2022, up from $148.50 in 2021.

Now for the not so good news. The financial outlook for Social Security, the nation’s preeminent safety net program, has deteriorated over the past couple of years. The Social Security trust fund most Americans rely on for their retirement is now projected to run out of money in 2033, one year sooner than recently forecast. Under current law, full benefits cannot be paid when Trust Fund reserves are depleted. But tax revenues will continue. Tax revenues are currently projected to be sufficient to support expenditures at a level of at least 75% of scheduled benefits in 2033, then declining a bit further decades later. This appears to be the worst-case scenario for the next 50+ years.

Over the next twelve years, we all will be hearing more about this. Pressure will build on politicians to address the issue. We do consider it likely that the shortfall will be addressed, although an increase in taxes and/or a decrease in benefits in some form (means testing?) are possible outcomes. We certainly hope that benefits will not be reduced for our clients in or near retirement. As always, we suggest you call us to discuss your filing options and how to maximize your benefits.

Recent Commentaries

The Death of Optimism?

It is hard to be optimistic right now. After two years of dealing with the pandemic – and that’s not over yet – we now

Read More »

Something To Fear?

Have you seen this ad streamed at you: “Wall Street legend warns ‘A strange day is coming.” If you click on it, you see that

Read More »

The Ukrainian Invasion

The great Russian writer Leo Tolstoy wrote that “there is no greatness where there is not simplicity, goodness, and truth.” Vladimir Putin’s explanation of his

Read More »

Women Belong

In 1965 Mattel put out a Barbie that came with a scale fixed at 110 pounds and a diet book with a single instruction: “Don’t

Read More »