If there is a "silver lining" to all the inflation talk, it may be that Social Security benefits are expected to see a larger-than-normal increase in 2022. More than 65 million Americans receive Social Security and the annual cost of living adjustments are designed to help recipients manage higher costs.
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! 1
To put things in perspective, benefits rose 1.3% in 2021.The average monthly benefit is $1,544 for retired workers. So a 6.1% increase amounts to $94 more a month.2 That might not be quite enough for a car payment, but it’s double the 3% raise being given to U.S. workers in 2021.3
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.
A lot can change between now and January 2022, but remember that data from the third quarter of 2021 will be the basis for the COLA for next year. The Bureau of Labor Statistics bases its annual adjustment on the Bureau of Labor Statistics data in the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as the CPI-W.
In my experience, Social Security can be confusing. It is extremely important to understand all the factors that determine the maximum benefits someone can receive because it is a major source of retirement income for 62% of retirees.4
Retirement may hold many surprises. But your sources of retirement income shouldn't be one of them. It's critical to have a strategy that keeps your expectations in line with reality. To help you prepare, I am hosting a “Social Security & Retirement Planning” webinar with Kurt Czarnowski, the Social Security Administration’s former Regional Communications Director for New England. He will provide a wealth of information about the Social Security system and cover topics such as:
- When someone can start to collect
- How a retirement benefit is calculated
- The impact of working in retirement
- Spousal and survivor benefits
This webinar will be held on Wednesday September 29, 2021 at 5:30 p.m. so be sure to save the date! An email invitation with a registration link will be sent next week. Let me know if there are any specific questions you would like answered during the webinar in advance.
As always, if you want to set up a time to discuss any financial opportunities or concerns, don’t hesitate to call or email me. You can also schedule a phone call or meeting by clicking here.
1) Fortune.com, July 15, 2021
2) SSA.gov, June 2021
3) SHRM.org, June 2021
4) EBRI.org, 2021. “Retirement Confidence Survey”