WASHINGTON (AP) — Millions of retirees on Social Security will get a 5.9% boost in benefits for 2022. The biggest cost-of-living adjustment in 39 years follows a burst in inflation as the U.S. economy struggles amid the pandemic.
The COLA, as it’s commonly called, amounts to an added $92 a month for the average retired worker, according to estimates Wednesday from the Social Security Administration. A long lull in inflation has resulted in cost-of-living adjustments averaging just 1.65% a year over the past 10 years. With the increase, the estimated average Social Security payment for a retired worker will be $1,657 a month next year. A typical couple’s benefits would rise by $154 to $2,753 per month.
That’s just to help make up for rising costs that Social Security recipients are already paying for services and food, gasoline and other goods.
“It goes pretty quickly,” retiree Cliff Rumsey said of the COLA increases. He lives in South Carolina and cares at home for his wife of nearly 60 years, Judy, who has advanced Alzheimer’s disease. Rumsey said he has noted price increases for wages paid to caregivers who occasionally spell him and for personal care products for his wife.
The COLA affects household budgets for about 1 in 5 Americans. That includes Social Security recipients, disabled veterans and federal retirees, nearly 70 million people in all.
Among them is Kitty Ruderman, of New York City, a retiree who has been collecting Social Security for about 10 years. “We wait to hear every year what the increase is going to be, and every year it’s been so insignificant,” she said. “This year, thank goodness, it will make a difference.”
AARP CEO Jo Ann Jenkins called the increase “crucial for Social Security beneficiaries and their families as they try to keep up with rising costs.”
Policymakers say the adjustment is a safeguard to protect Social Security benefits against the loss of purchasing power, and not a pay bump for retirees. About half of seniors live in households where Social Security provides at least 50% of their income, and one-quarter rely on their monthly payment for all or nearly all of their income.
“You never want to minimize the importance of the COLA,” said retirement policy expert Charles Blahous. “What people are able to purchase is very profoundly affected by the number that comes out. We are talking the necessities of living in many cases.”
This year’s report from Social Security trustees amplified warnings about the long-range financial stability of the program. But there’s little talk about fixes in Congress, with lawmakers consumed by President Biden’s domestic legislation and partisan machinations over the national debt. Social Security cannot be addressed through the budget reconciliation process that Democrats are attempting to use to deliver Biden’s agenda.
Social Security’s turn will come, said Rep. John Larson, D-Conn., chair of the House Social Security subcommittee and author of legislation to tackle shortfalls expected to leave the program unable to pay full benefits in less than 15 years. His bill would raise payroll taxes that fund the program while also changing the COLA formula to give more weight to health care expenses and other costs that weigh more heavily on the elderly. Larson said he intends to press ahead next year.
“This one-time shot of COLA is not the antidote,” he said.
Although Biden’s domestic package includes a major expansion of Medicare to cover dental, hearing and vision care, Larson said he hears from constituents that seniors are feeling neglected.
“In town halls and tele-town halls they’re saying, ‘We are really happy with what you did on the child tax credit, but what about us?’ ” Larson added. “In a midterm election, this is a very important constituency.”
The COLA is only one part of the annual financial equation for seniors. An announcement about Medicare’s Part B premium they pay for outpatient health care — now $148.50 a month — is expected soon. It’s usually an increase, so at least some of any Social Security raise gets eaten up by health care.