Social Security’s ANNUAL cost of living (COLA) will experience a positive adjustment in 2022.
The announcement marked the largest annual increase in benefits for federal retirees in 40 years.
How much is the increase in COLA?
On Wednesday, the Social Security Administration announced that the COLA adjustment will be a 5.9% increase.
According to reports, pay increases are measured based on the annual change in “the consumer price index for workers in the third quarter.”
The government’s civil service pension system determines annual pension increases for members on this basis.
As a result, people registered in the system will benefit from a gain of 5.9% on their pension payments in 2022.
The estimated average Social Security payment for a retired worker will be $ 1,657 per month next year. The benefits for a typical couple would increase from $ 154 to $ 2,753 per month.
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 total.
What is COLA?
Adjustments to the cost of living began when the law was passed in 1973.
The intention is to use COLA for Social Security and Supplementary Security Income (SSI) benefits to track inflation rates, according to the Social Security Administration.
To calculate COLA, the Social Security Act uses a formula.
âCOLAs are based on increases in the Consumer Price Index for urban and office workers (CPI-W),â according to the Social Security Administration.
CPI-Ws are calculated monthly by the Bureau of Labor Statistics. ”
How does early retirement affect COLA?
If you choose to apply for benefits before your full retirement age, you may receive less.
Waiting until full retirement age, which ranges between 66 years and two months to 67 depending on your date of birth, will give you a higher monthly payment.
Delaying your application until age 70 will also help you receive maximum benefits.
What’s next for COLA?
Those receiving social security benefits will see COLA in January 2022.
For those who receive the additional security income, the increase takes effect on December 30, 2021.
Payments will start for retirees based on when you typically receive your payment.
The Social Security Administration has released a 2022 benefit payment schedule to let you know when you will receive yours.
The 5.9% increase for 2022 was determined on October 13, 2021.
The next COLA increase for 2023 will be determined in October 2022.
We pay for your stories!
Do you have a story for the US Sun team?