Social Security Recipients In For MAJOR Relief With Record-Setting Bonus
(ReliableNews.org) – Social Security is a benefit from the federal government that workers pay into throughout their time in the workforce with the promise of collecting that income back once they reach retirement age. For those already collecting Social Security, the dispersing administration adjusts for the cost of living (COLA) each year, and in 2022, they might see the biggest jump yet. Due to high inflation, the Social Security Administration (SSA) is likely to issue a COLA close to 8% at the close of this year, surpassing the 5.9% increase in January.
Historical COLA Adjustments
In the last 10 years before the pandemic, annual adjustments to Social Security payments ranged between 1% and 3.6% for retirees. Although there have been spikes exceeding that percentage throughout the history of the SSA, COLA has not jumped over 8% since 1981, when payments were adjusted by a whopping 11.2% and 14.3% in 1980.
The reason for the most recent presumed jump is simple: inflation.
The SSA Boost Decision
To calculate COLA increases for Social Security benefits, the federal agency governing Social Security uses the Consumer Price Index for the (CPI-W) for Clerical Workers and Urban Wage Earners. This data is updated by the Bureau of Labor Statistics (BLS) each month as a measure of consumer prices as it pertains to workers. To calculate the index, the organization looks at certain household demographics across the country. The government found this number to best reflect COLA needed to support the retired community across the United States.
Prior to a report released on June 2 by the SSA, the program was expected to raise benefits by only 3.8% at the end of the year. However, the CPI-W showed the percentage was too low and not reflective of what’s now happening with the economy, so the administration plans to raise the number to around 8%.
The Effect on Retirees
Those receiving Social Security can breathe a sigh of relief that the expected COLA increase will better match inflation rates and the growing prices of goods throughout the country. However, the prediction isn’t set in stone. The agency is not yet close to making a final decision and will look to the index before making a final call. Although Chief Actuary of the SSA Stephen Goss made his prediction based on current economic numbers, those may change by the time the government makes its final decision on the matter.
Do you think the SSA will stick to an 8% increase, or do you believe the economy might push that percentage higher?
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