The news keeps getting better for Social Security recipients.
A few weeks ago I wrote about the projected COLA increase for 2022. It’s now projected that benefits will increase 6.1% in 2022, up from the 4.7% forecast just two months ago. That would be the most significant increase since 1983.
It’s all about inflation. Social Security cost of living adjustments (COLA) are based on the consumer price index, which rose 5.4% in June — its largest 12-month increase since 2008. The official announcement is expected in October and, once it’s confirmed, the revised payment will go into effect in January 2022.
More than 65 million Americans receive Social Security, and the annual cost of living adjustments are designed to help recipients manage higher costs. At the start of 2021, recipients saw a 1.3% increase, according to SSA.gov
The average monthly benefit is $1,544 for retired workers. So a 6.1% increase amounts to $94 more a month. That might not be quite enough for a car payment, but it’s double the 3% raise being given to U.S. workers in 2021.1,2
Income in retirement is a cornerstone of a proper retirement plan. When we work with clients it is imperative that we understand what will be coming in from both social security and pensions, if applicable. We then figure out what will need to come out of savings to supplement that income. An increase or decrease in social security needs to be addressed in your financial plan.
The truth is Social Security can be confusing. One survey found only 6% of Americans know all the factors that determine the maximum benefits someone can receive. If you have any questions, please reach out. We have a number of resources at our fingertips that you may find helpful and we are always open to having a discussion with you on how to help.3
1. SSA.gov, June 2021
2. SHRM.org, June 2021
3. FinancialAdvisorIQ.com, July 19, 2021