Social Security benefits, on which tens of millions of senior Americans rely to pay their bills, will rise by 5.9 percent in 2022, the Social Security Administration announced on Wednesday. The rise, a cost-of-living adjustment (COLA) that affects approximately 70 million Americans, comes when consumer prices have risen dramatically, New York Times reported.
According to the Social Security Administration, the set of changes that take effect in January of each year are based on an increase in average salaries. The maximum amount of wages subject to Social Security tax (taxable maximum) will increase to $147,000 from $142,800 as a result of this increase.”
Larger Paychecks To Be Distributed In January
The larger paychecks will begin to be distributed in January for the majority of recipients. Around 8 million users of Social Security’s Supplemental Security Income program, which is for people who are disabled or have a low income, will begin receiving enhanced benefits by the end of December. It is the largest increase in 40 years, as food, automobile, rent prices continue to inflate, and other economic disruptions caused by the COVID-19 pandemic.
Rising inflation helped the Social Security Administration determine that the cost-of-living adjustment, or COLA, for 2022 will be 5.9 percent. According to data issued Wednesday by the Bureau of Labor Statistics, prices grew 5.4 percent on an annualized basis in September, while the inflation rate rose 0.4 percent from August, MSN News reported.
The Highest Since 1982
The increase, known as a cost of living adjustment, is the highest since 1982 when it was 7.4 percent. The average benefit, which is received by 70 million Americans, would rise to $1,657 per month, up to $92 from this year. Consumer prices in the United States have risen at their quickest rate in years, prompting the adjustment which is based on the Consumer Price Index from the Labor Department, which increased 5.4 percent from a year ago in September.
As the world economy recovers from pandemic-related shutdowns, inflation has surged this year. The early price increases were spurred by resurgent airfares, restaurant meals, and other commodities whose demand had plummeted in 2020. Product shortages and supply-chain difficulties have recently added to the gains.
The increase helps the elderly, disabled, children, and spouses of deceased recipients pay for food, housing, and utilities. Some praised the additional benefit but feared it wouldn’t be enough to balance inflation and Medicare’s mounting costs. AARP CEO Jo Ann Jenkins said the rise was vital for families and beneficiaries to keep up.