Timely and Relevant News: Social Security Sees Its Largest Increase In 40 Years
The Social Security Administration recently announced that the cost-of-living adjustment (COLA) will be 5.9% in 2022. This is the largest increase in Social Security in nearly 40 years. By comparison, the 2021 cost-of-living adjustment was only 1.3%. The COLA adjustment is based off the Consumer Price Index (CPI-W).
More than 64 million Social Security beneficiaries will see the boosts in their monthly checks starting in January. Meanwhile, about 8 million Supplemental Security Income or SSI beneficiaries will see the increase starting Dec. 30 2021.
Retirees will have to factor in Medicare Part B and Part D premiums, along with income-related surcharges—all of which reduce their overall benefits package. Medicare Part B premiums can be one of the fastest growing costs in retirement. Medicare Part B premiums are automatically deducted from Social Security checks and often consume most if not all of the Cola increase.
If you’re on Medicare, you won’t get your exact 2022 Social Security benefit amount until the official Medicare premium amounts are announced. You can check in December if you have an online Social Security account.
For guidance with Medicare, we encourage you to refer to our Roadmap to Medicare resources.
For additional guidance with Social Security, we encourage you to watch our Preparing For Retirement - Social Security Presentation.
Employers and employees each pay 7.65% of wages to support Social Security and Medicare. Self-employed individuals pay both the employer and employee share for a combined tax rate of 15.3%.
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