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Social Security Increase Will Be Finalized Next Month – Biggest COLA Bump In 13 Years

Social Security recipients will know about the final increase in the Cost-Of-Living Adjustments (COLA) for 2022 by next month. The possible increase would be as high as 5.3 percent.

The Biggest COLA Bump In 13 Years

The estimated 5.3 percent increase in COLA would be the highest in 13 years. The increase of COLA for 2021 was only 1.3 percent. In April, the 2022 COLA increase was estimated at 4.7 percent, The Motley Fool reported.

The increase will depend on how the United States economy performs in the next months. Further, the increase will be based on whether the Federal Reserve raises interest rates to deal with higher inflation.

The latest 5.3 percent increase in COLA was an estimate made by The Senior Citizens League. They based their calculation on the Bureau of Labor Statistics Consumer Price Index data through May. The Senior Citizens League website, author, and human resources expert Ralph Smith shared with FedSMith.com recently, “While no one knows the exact percentage of the COLA increase retirees will see in January, we do know there will be an increase. That is different than in some recent years when there was not any increase.”

Also Read: Next Year’s Social Security Checks May Get Highest COLA Hike In 13 Years

How Is The COLA Calculated?

The COLA increase is based on the prices of goods and services. As such prices go up, the benefits paid to retirees, long-term disabled people, and survivors of deceased workers also go up.

Since 1975, Social Security’s COLA has been calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W basis for the increase will only be from the third quarter, which is July through September, to determine next year’s COLA.

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Would The Increase Really Help Social Security Beneficiaries

Although next year’s COLA increase is the biggest bump in the past 13 years, experts say it might not be a great help. For an average retired worker who is currently receiving $1,658 monthly, the estimated increase next year would mean a $94 additional payout. However, because of the higher prices for the goods and services that the beneficiaries use their payouts on, the increase might not help.

Also Read: These Are The Seven Reasons Why You May Not Be Receiving Social Security Benefits