EXPLAINER: Rising inflation is expected to lead to a sizeable increase in Social Security’s annual cost-of-living adjustment, or COLA, for the year 2022. Exactly how much will be revealed Wednesday morning.
The Great Recession saw a COLA increase of 5.8% for 2009, and the number for next year may rival that.
A 6% COLA would increase the average Social Security payment for a retired worker by close to $93 a month, to $1,636 next year. Compare that toAs the economy recovers from the shock of coronavirus shutdowns, prices are rising at a pretty good clip. It affects the household budgets of about 1 in 5 Americans, including Social Security recipients, disabled veterans and federal retirees, about 70 million people.About half of seniors live in households where Social Security benefits account for at least 50% of their income, and one-quarter rely on their monthly payment for all or nearly all their earnings. For this latter group, the COLA can literally make a difference in what they’re able to put on the table.
On the other side, groups pressing to reduce federal deficits urge switching to an alternate inflation measure that factors in consumers’ habit of substituting cheaper goods when prices rise. That would yield slightly lower estimates of cost-of-living changes.that the program’s long-term fiscal imbalance is casting a longer shadow.
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