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2022 Social Security Cost of Living Adjustment Could be 5 Percent

David Certner, Legislative Counsel and Director of Legislative Policy for Government Affairs at AARP says that "the COLA will no doubt be higher than it has been for the last decade, probably in the 5 percent or higher neighborhood because of rising prices.”

Any estimates are preliminary, and the actual COLA will depend on changes in prices between July and the end of September. The Social Security Administration typically announces the amount of the annual adjustment, if any, in October. The increase in benefits typically goes into effect in January.

Estimates for the 2022 COLA range from 4.5 percent from Moody's Analytics to 6.1 percent from The Senior Citizens League. Economist Bill McBride, who writes the finance and economics blog Calculated Risk, estimates the 2022 COLA at 5.5 percent.

COVID-19 driven inflation fuels COLA increase
Rising prices in 2021 are the driving force behind the higher COLA estimates. “It's the energy prices that are causing havoc,” says Mary Johnson, Social Security and Medicare policy analyst for The Senior Citizens League. A gallon of unleaded gasoline costs an average of $3.16, up from around $2.20 a year earlier. Oil demand collapsed last year at the onset of the pandemic, and it takes time to ramp up production again. Now, with businesses reopening and people traveling more, demand is growing. Supply just hasn't caught up yet.

"Higher prices reflect the disarray caused by the pandemic,” says Mark Zandi, chief economist at Moody's Analytics. The price of airline tickets, for example, has surged 24.6 percent in the past 12 months ending June 30, as travelers scramble to get seats on flights that had been cut back by COVID-19 restrictions. Used car prices have jumped 45.2 percent in the past year, because the supply of new cars fell sharply during the pandemic. Zandi expects the inflation rate will decline to about 2 percent in 2022 as supply and demand even out.

How does Social Security calculate the COLA?
Your Social Security payment typically is adjusted annually for inflation to ensure that the purchasing power of benefits is not eroded by rising prices. This cost-of-living adjustment, or COLA, tracks inflation using the government’s measure of consumer prices for a variety of household goods and services. Social Security uses the Consumer Price Index for Urban Wage Earners and Clerical Workers, or the CPI-W, as the official measure of the monthly price change in a market basket of goods and services, including food, energy and medical care.

Benefits go up if there is a measurable increase (at least 0.1 percent) in this price index from year to year. If a 5 percent increase were to go into effect in January 2022, it would boost the average monthly benefit by about $77 a month for individuals

For 2021, the cost-of-living increase was 1.3 percent, boosting benefits by an average of $20 a month. The COLA was 1.6 percent in 2020, 2.8 percent in 2019 and 2 percent in 2018. The most recent year beneficiaries received a COLA of more than 5 percent was in 2008, when there was 5.8 percent increase.

Setting up your online account with the agency is the easiest way to stay informed about COLAs
The Social Security Administration will announce the percentage of the 2022 COLA in October. Beginning in December 2021, most Social Security beneficiaries will be able to find out how much money that adjustment will add to their checks via the online message center of their My Social Security account, according to a Social Security Administration spokesperson. The increase will be added to Social Security payments starting in January 2022.

The first step, if you haven’t done so already, is to create a My Social Security account. Go to

Once you have an account, you will be able to see how much you have earned for each year you’ve worked so far.

You also can use the message center of your My Social Security account to let the agency know how you want to receive notifications: by email, text message or both. Or you can request that they don’t send notifications at all.

Keep in mind - a possible offset
Even when there is a cost-of-living adjustment, you might not see all of the increase in your benefit payment. If your Medicare Part B premiums are deducted from your Social Security (as is the case with 70 percent of Part B enrollees), a Medicare rate increase could offset the COLA.

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