What You Need to Know
- This will be the largest cost-of-living adjustment in 40 years.
The annual cost-of-living adjustment, or COLA, for Social Security benefits in 2022 will be 5.9%, the Social Security Administration announced Wednesday. That’s the biggest increase since 1982. based on Tuesday’s Consumer Price Index announcement. according to Social Security and Medicare policy analyst Mary Johnson of The Senior Citizens League.
The COLA is based on third-quarter inflation data.
“This would be the highest COLA that most beneficiaries living today have ever seen,” said Social Security and Medicare policy analyst Mary Johnson of The Senior Citizens League, in a statement, noting that inflation patterns caused by the COVID-19 pandemic are “unprecedented” in her experience.
The Consumer Price Index, announced Wednesday, was up 5.4% in September versus a year ago and 0.4 % from August, the Labor Department reported Wednesday. (The CPI includes food and energy.)
Economists polled by Dow Jones had forecasted a 0.3% month-over-month increase and a 5.3% increase from a year earlier.
Key components of the increase included the energy index, which rose 1.3 % from the previous month, mainly due to the gasoline index, which rose 1.2%, and fuel oil, which rose 3.9%. The food index rose 0.9%, and new vehicle prices increased 1.3% from the previous month.
September’s core CPI, which excludes food and energy, rose by 0.2% from August and 5.4% from a year ago, according to the BLS. (In August, the core CPI was up 0.1% from July and 4.0% from a year earlier.)
“Over the past 21 years, COLAs have raised Social Security benefits by 55% but housing category costs rose nearly 118% and health care costs rose 145% over the same period,” Johnson said.