For years Social Security recipients have seen modest increases in benefits based on cost-of-living-adjustment (COLA) increases and some years recipients received no increase in benefits, but that is expected to change in 2022.
In a recent story posted by CNBC it was reported that beneficiaries could see a 6.1 percent increase in benefits for 2022. This would be the largest increase in benefits since 1983. The larger than normal increase is due mainly to inflation, according to the story.
The annual Social Security benefit increase is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This is an index that looks at increases in gasoline and other purchased items and when these prices go up so too does Social Security’s COLA projections.
Many people have been critical of using the CPI-W as the guide in determining the Social Security COLA because the CPI-W does not do a good job of reflecting the expenses seniors are faced with. Other studies have shown that seniors face the biggest increases in expenses when paying for healthcare costs and housing costs.
There are proposals to change how the Social Security COLA is determined. A bill introduced as the Fair COLA for Seniors Act of 2021, proposed by U.S. Rep. John Garamendi, D-California, calls for moving from the CPI-W to the CPI-E in determining Social Security COLA increases. In the story posted by CNBC it was reported that the CPI-E would provide higher benefits to Social Security beneficiaries, but not substantial increases. For instance, it was estimated that it would account for an additional annual increase of 0.2 percent compared to the CPI-W and after 25 years it would increase benefits about 5 percent higher. President Joe Biden campaigned on an increase in Social Security benefits, but no specific bill has yet to materialize on what Biden wants to see regarding Social Security increases.
