Each year, the Social Security Administration adjusts the amount it pays out to beneficiaries based on the annual increase in the consumer price index for urban wage earners and white-collar workers (CPI-W) from the third quarter. Last month, the US Bureau of Labor Statistics released September data with an increase of 5.9%.
Shortly after that press release, the Social Security Administration announced a 5.9 percent cost of living (COLA) increase for 2022. What does that mean for the beneficiaries?
COLA increase means $92 per month increase in average benefits
The monthly average increase for all retired employees will increase by $92 in 2022, going from $1,565 to $1,657. This is more than four times the increase for 2021 when it was $20. The maximum monthly payment amount in 2022 for those who have reached full retirement age (FRA) will increase to $197, increasing to $3,345 from $3,148 in 2021.
The Federal Standard Payments for Supplemental Support Income (SSI) will rise to $841 per month for individuals, an increase of $47. For couples, they can receive an additional $70 per month for a total of $1,261 in 2022.
YES – increased prices are tough for people living on a fixed income.
The government is aware of this and is dampening it.
& next year Social Security benefits – Supplemental Security Inc benefits will be increased by 5.9%
(That’s over 65mm people)
— Stephanie Ruhle (@SRuhle) Nov 10, 2021
For those who receive disability insurance, the threshold is increased by $40 for non-blind recipients and $70 for blind beneficiaries. This translates to $1,350 and $2,260 per month respectively. Those who receive trial period benefits can get an additional $30 per month for a total of $970.
From the beginning of next month, the Social Security Administration will start sending a letter to all social security beneficiaries, outlining their new distribution amount. However, most recipients who have an online account through my Social Security account can also see their updated amount there.
For the beneficiaries who receive Medicare, the Social Security Administration won’t be able to calculate the new benefit until after the 2022 Medicare premium amounts are announced. The Social Security Administration provides a fact sheet detailing the new changes.
How is COLA 2022 calculated?
The increase in annual COLA is calculated using the CPI-W, but the Social Security Administration only uses the third quarter of each year to calculate the COLA.
The agency compares the year-over-year change from the third quarter — July, August and September — and formulates how many benefits need to be increased the following year to reflect the change.
The COLA is applied to payments going out to: more than 64 million social security beneficiaries from January 2022. However, the first recipients of payments based on the COLA 2022 will be the approximately 8 million beneficiaries of additional support whose payments begin Dec 30, 2021. The Social Security Administration reminds beneficiaries that some recipients receive both Social Security and supplemental support income.