Social Security Payments Experience The Largest Increase in Decades; cost of living skyrockets

Social Security Payments Experience The Largest Increase in Decades; cost of living skyrockets
Social Security Payments Experience The Largest Increase in Decades; cost of living skyrockets

Americans who receive Social Security payments from the federal government will receive a nearly 6% increase in their benefits beginning in early 2022.

The Social Security Administration reported Wednesday that a 5.9% increase in payments is necessary to counter the current spike in inflation caused by supply chain bottlenecks, labor shortages and other economic shocks. related to the covid pandemic.

The largest checks will go to nearly 70 million people, most of whom will see the change in January. This includes social security recipients, disabled veterans, and federal retirees.

Some 8 million Americans who receive benefits from the Supplemental Security Income program will see their payments increased as of the end of December.

Recipients of the highest payments will be notified in December of the dollar amount of their new benefits. The average retired worker will get $ 92 more a month. In 2021 the increase was approximately $ 20.

With the increase, the average estimated Social Security payment for a retired worker will be $ 1,657 a month next year. The benefits of a typical couple would increase by $ 154, to $ 2,753 per month.

About 40% of the beneficiaries depend on the monthly checks for 90% of their income, and it constitutes half of the income of approximately two-thirds of the beneficiaries.

AARP CEO Jo Ann Jenkins called the increase in government benefits “crucial for Social Security recipients and their families trying to keep up with rising costs.”

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Data released by the Bureau of Labor Statistics showed that prices rose 5.4% in September on an annualized basis, and inflation rose 0.4 from August.

The latest Consumer Price Index shows where inflation is hitting Americans the most. Some of the most notable price increases since September 2020 are: rental cars (43%), gasoline (42%), second-hand cars (24%), bacon (19%), hotels (18%), eggs (13%) and furniture (11%).

Each year, the Social Security Administration calculates the cost of living adjustment (Cola) for the following year. It normally increases between 1% and 2%, with an average of 1.65% in the last 10 years.

The last time it reached similar levels was in the middle of the Great Recession, when benefits increased by 5.8% for 50 million people.

The biggest cost-of-living adjustment came in 1982, early in the Reagan administration, when inflation was a similar concern.

Social Security is financed by payroll taxes collected from workers and their employers. Each of them pays 6.2% of wages up to a cap, which is adjusted each year for inflation.

Next year, the maximum amount of income subject to Social Security payroll taxes will increase to $ 147,000.

With reports from the Associated Press

 
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