Amid skyrocketing inflation, the Social Security Administration announced Wednesday it will give beneficiaries their largest monthly benefits increase in four decades beginning next year.
“Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans will increase 5.9 percent in 2022,” the agency said in a news release.
“The 5.9 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2022,” the news release went on. “Increased payments to approximately 8 million SSI beneficiaries will begin on December 30, 2021.”
SSA, when explaining the methodology for the benefits bump, added that the Social Security Act “ties the annual COLA to the increase in the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statistics.”
“Some other adjustments that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $147,000 from $142,800.”
CNBC reported the 2021 COLA was 1.3 percent. The 5.9 percent increase is the largest year-to-year increase in 39 years.
The average retired worker will see their monthly benefit amount rise from $1,565 to $1,657. It comes at a time when Americans, particularly those on fixed incomes, might find themselves struggling to keep up.
AARP CEO Jo Ann Jenkins celebrated the benefit increase in comments to CNBC.
“Today’s announcement of a 5.9% COLA increase, the largest increase in four decades, is crucial for Social Security beneficiaries and their families as they try to keep up with rising costs,” Jenkins said.
News of the COLA increase was released on the same morning that the Labor Department reported that consumer prices rose 0.4 percent in September — bringing the year-to-date increase of basic commodities to 5.4 percent.
Such a drastic increase in the price of goods and services has not been seen since 1991.
So far in 2021, prices on food and fuel are way up from the same time in 2020. CNBC reported food prices rose 1.2 percent in September, while meat prices during the month rose 3.3 percent.
The cost of meat alone over the last 12 months has increased 12.6 percent.
Fuel has perhaps seen the biggest jump in cost. Gas prices are up an average of 42.1 percent from this time last year.
Meanwhile, the average price of rent for non-homeowners jumped 0.4 percent in September — its largest monthly increase since 2006.
The COLA announcement and price index report coincides with expected supply chain disruptions for the months ahead. With ports backlogged and companies struggling to find workers despite millions of job openings, experts are warning that the coming winter might be a challenging one.
A White House official told Reuters earlier this week, “There will be things that people can’t get” at Christmas.
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