The COLA is big enough to have an impact on the overall economy. Add to the mix supply chain problems that have slowed deliveries of everything from refrigerators to running shoes.Īll that gets sifted into the prices that consumers pay for their everyday needs. But food had already been going up and so are labor costs as employers compete to hire choosy workers seeking higher pay and better benefits. Gas serves as an ever-present reminder, above $3 a gallon in most states, $4 a gallon in California and Hawaii. Compare that with this year’s COLA, worth only about $20 a month.Īs the economy recovers from the shock of coronavirus shutdowns, prices are rising at a pretty good clip. Up to now, they’ve collected meager to modest annual adjustments, not counting three years for which there was no COLA because inflation barely showed a pulse.Ī 5.9% COLA will increase the average Social Security payment for a retired worker by about $92 a month, to $1,657 next year. Next year’s number won’t come close to that, but it’s still the biggest Social Security hike the vast majority of baby boomer retirees have seen. The Great Recession saw a COLA increase of 5.8% for 2009, and next year’s number is just a notch above that.īut one has to go back nearly 40 years to find a bigger COLA boost, the 7.4% awarded for 1983. The annual review is now tied to changes in an official measure of inflation and proceeds automatically and with no political brinkmanship. Policymakers say the COLA works to preserve the purchasing power of Social Security benefits and shouldn’t be seen as a pay hike for retirees.Īt one time Congress had to approve inflation increases, but starting in the mid-1970s lawmakers turned that function over to nonpartisan experts within the government bureaucracy. WHY ARE SOCIAL SECURITY BENEFITS ADJUSTED? But the economic recovery from the coronavirus pandemic has triggered rising prices for a wide range of goods and services, and that will translate to bigger checks for retirees. Over the last 10 years, the Social Security COLA has averaged about 1.7% annually as inflation remained low. The Social Security Administration announced the 5.9% COLA on Wednesday after a Labor Department report on inflation during September. WASHINGTON (AP) - Rising inflation has triggered a sizable increase in Social Security’s annual cost-of-living adjustment, or COLA, for 2022.
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