13 October (NWN) — Social Security recipients in the United States will receive a major cost-of-living adjustment in 2022 — about 6% — after more than a decade of growth that failed to match rising costs of goods and services.
The administration announced Wednesday that payments to beneficiaries would increase by 5.9% in response to inflation.
The Social Security Administration’s cost-of-life adjustment, or COLA, is its biggest increase since 1982. Officials said about 70 million Americans would see a hike in wages.
Each year, the administration bases the COLA on the Labor Department’s Consumer Price Index from the third quarter to the third quarter. Last month, consumer prices were 5.4% higher than in September 2020.
In January, the estimated average Social Security benefit for retired workers will increase from $1,565 to $1,657. The maximum benefit at full retirement age would be $3,148 to $3,345.
The administration said the tax rate for Social Security and Medicare would remain the same for employees (7.65%) and the self-employed (15.3%). The maximum taxable income would increase from $142,800 to $147,000.
Over the past 10 years, Social Security’s COLA has averaged 1.7%.
Mark Goldwyn of the Committee for a Responsible Federal Budget told The Washington Post that the wage increase raises concerns that the date on which Social Security will go bankrupt could be extended to 2032.