After many years of slight increases in the rate of Social Security benefits received by older Americans, this year’s growth will be the biggest. One of the driving forces for the considerable increase of Social Security benefits is the COVID-19 related spike in inflation.
Social Security benefit recipients include retirees, older Americans, disabled people, and the like. Around 68 million people rely on these benefits. Accordingly, these 68 million will see a likely 6 percent or 6.1 percent increase as to the cost-of-living adjustment, hence a higher amount in the monthly checks received, USA Today reported.
The Senior Citizen League noted that the increase would outpace the 1.4% average bumps in Social Security payments since 2010 and is indeed the most significant increase since the year 1982. The six or 6.1 percent increase would mean that a retiree who gets a monthly check of $1,599 this 2021 could potentially get a $93.54 increase. This would bring the average monthly check to $1,652.54 by next year.
The final increase would be released through an announcement by the Social Security Administration this October. The cost-of-living adjustment (COLA) next year will be based on average annual increases in the consumer price index for urban wage earners and clerical workers from July until September. The six or 6.1 percent increase is the projection of the Senior Citizens League, but it could go lower because inflation has been volatile recently. Although overall prices increased 5.4 percent from June to July, a 13-year high, the inflation went down to 5.3 percent in August. Hence, there is a possibility that the Social Security increase would dip to 5.9 percent.
The high COLA was also estimated based on higher gasoline and transportation costs. Mary Johnson, a policy analyst for the Senior Citizens League, shared, “That works to the advantage of retired and disabled beneficiaries for the COLA payable in January 2022. That has not been the case for many of the past 12 years when cheap gasoline and other falling prices dragged down the COLA.” Johnson noted, however, that they are hoping the Social Security Administration would base the COLA on the items that elderlies spend on, such as medicine, food, and housing.