Retirees will soon see the biggest boost to their Social Security checks in over four decades following Wednesday’s announcement by the Social Security Administration (SSA) that the amount would be increased by 5.9% in 2022. The move will affect an estimated 70 million Americans.
Social Security checks are regularly modified with cost of living adjustments (COLA) to ensure retirees will be able to afford basic needs. The boosted checks will begin arriving in December for approximately 8 million Americans, according to the SSA. Another 60 million Americans will receive the same checks by January 2022.
For the last 10 years, COLA has been mired at an average growth rate of 1.65%, but this latest raise can be attributed to concerns about rising inflation. Policymakers at the Federal Reserve and the White House believe that inflation is likely to be transitory and that it will ease once the ongoing supply chain bottlenecks are reduced.
However, the prices for basic goods like food and gas have continued to go up, raising concerns that Social Security payments will fall behind the rate of inflation. The SSA estimates that nine out of 10 people who are 65 or older are receiving a Social Security check, and these benefits contribute to up to 30% of their income. Beyond retirees, 8.1 million disabled Americans rely on Social Security payments as well.
A change to the amount provided may also see action from Congress. Rep. John Larson, D-Conn., chairman of the House subcommittee on Social Security, told the Associated Press that he would introduce a bill that would alter the COLA formula to give more weight to healthcare expenses and other costs that disproportionately impact the elderly. His proposed bill calls for an increase on payroll taxes to pay for the costs.
Larson has been a staunch advocate for congressional action that would do more to protect Social Security payments for those who rely on them. After the new COLA adjustment was announced, Larson released a statement that said the increase only underscores the need for a longer-term solution to protect these payments.
The last change Congress made to SSA benefits was over 40 years ago, he said, adding that the COLA adjustments are not enough to account for growing inflation or cover seniors’ basic costs.
“Congress has failed seniors and that needs to change,” said Larson. “The time is now to enhance Social Security.”