The Social Security Increase for 2022 is being announced; here's how much benefits will increase in 2023; meanwhile, heres what the increase will be; how many benefits could increase?
Millions of Social Security recipients will get a 5.9% increase in benefits for 2022. The biggest cost-of-living adjustment in 39 years follows a sharp rise in inflation as the economy struggles to remove the sting of the coronavirus epidemic.
According to estimates released Wednesday by the Social Security Administration, the average retired worker earns $92 a month. That is a major change from 10 years of minus 1.65% inflation.
With the increase, the estimated average Social Security payment for a retired worker will be $1,657 yearly next year. A typical couples benefits would rise $154 to $2,753 per month.
But, in the end, thats only to help offset the rising costs that consumers are already paying for food, transportation, and other goods and services.
Cliff Rumsey, a retired business owner, told the Washington Post that it goes pretty quickly" about the cost-of-living increases hes witnessed. Rumsey lives near Hilton Head Island, South Carolina, after a successful career in steel sales for reputable steelmaker. Judy, his wife of nearly 60 years, who has advanced Alzheimers disease, is now in his family. Since the outbreak of the coronavirus epidemic, Rumsey said he has noticed price increases for food, wages paid to caregivers who occasionally spell him, and personal care products for Judy, as well as energy costs.
The COLA affects about 1 in 5 Americans' household budgets. That includes Social Security recipients, disabled veterans, and federal retirees, or about 70 million people in total. For baby boomers who took their retirement within the last 15 years, it will be the largest increase theyve seen.
Its going to be a great campaign, said senior citizen Mary Johnson, whose nonpartisan Senior Citizens League group works for. But what were hearing is that even with the COLA, buying power will still be eroded because price increases are going up, he added.
AARP CEO Jo Ann Jenkins called the government payout increase crucial for Social Security beneficiaries and their families as they attempt to keep up with rising costs as their payments increase.
Policymakers claim the COLA was created to protect Social Security benefits from the loss of purchasing power, rather than a pay increase for retirees. About a quarter of seniors live in households where Social Security benefits provide at least 50% of their income, and one-quarter rely on their monthly payment for most or almost all of the income.
Charles Blahous, a retired public trustee who manages Social Security and Medicare finances, said, Regardless of the size of COLA, you never want to minimize the COLOLAs importance. The number of items people are able to purchase is very significantly affected by the number that comes out. In many cases, we are talking about the necessities of living.
This years Social Security trustees report intensified warnings about the program's long-term financial stability, but there'a been little talk about fixes in Congress, given President Joe Biden' sweeping domestic legislation and partisan maneuvers over the national debt. Social Security cannot be addressed through the budget reconciliation process Democrats are attempting to use to deliver Bidens promises.
But it will be Social Security's turn, according to Rep. John Larson, D-Conn., chairman of the House Social security subcommittee and author of legislation to address looming shortfalls that would make the program incapable to pay full benefits in less than 15 years. His bill would increase payroll taxes while also changing the COLA formula to give more weight to health care expenditures and other costs that weigh more heavily on the elderly. Larson said he plans to pursue his career in the future.
This one-time dose of COLA isn't the antidote, he added.
Although Bidens domestic package includes a substantial expansion of Medicare to include dental, hearing, and vision care, Larson said he hears from seniors that Democrats are feeling neglected.
In town halls and tele-town hall meetings, people are saying, We are really pleased with what you did on the child tax credit, but what about us? Larson added that This is a very important constituency in preparing for upcoming midterm elections, he added.
The COLA is only one component of the overall financial picture for seniors. In the interim, Medicare will announce the Part B premium for outpatient care. Its usually a raise, so at least 5% of any Social Security increase goes towards health care. The Medicare trustees report estimates a $10 increase for 2022, since the Part B premium is now $148.50 yearly.
Marilyn Moon, an economist who also served as a public trustee for Social Security and Medicare, said she believes that the current spike in inflation is an adaptation to extremely unusual economic circumstances, and that monetary policy will resuscitate with time.
I would imagine that there will be an increase this year that you wont see replicated in the future," Moon said.
She said that policymakers should not delay getting to work on retirement initiatives.
Were at a time where people dont respond to policy needs until there is lingering desperation, and both Social Security and Medicare benefit from long-range planning rather than short-run machinations, she added.
Social Security is funded by payroll taxes collected from workers and their employers. Each worker pays 6.2% on wages up to a cap, which is adjusted each year for inflation. Next year, the maximum amount of earnings subject to Social Security payroll taxes will rise to $147,000.
The financing scheme dates to the 1930s, when President Franklin D. Roosevelt devised the idea, believing a payroll tax would foster among average Americans sanity and shield the program from political interference.