Social Security Recipients to See a 5.9% increase in 2022

The Social Security Administration announced today that Social Security recipients will see a 5.9% increase in their payments in 2022.

That’s the largest increase those receiving Social Security payments have seen in nearly four decades.

And an illustration of how significant the inflation rate is in all areas of the economy.

Inflation

Pricing for food and energy (gasoline and natural gas, in particular) have increased substantially over the past months putting a dent in the average American’s budget.

But food and energy costs aren’t the only areas in which higher costs are being seen.

Pretty much every part of the economy is seeing higher pricing associated with production and distribution, and much of those increased amounts are being passed along to consumers.

Which is a novelty for most considering the U.S. economy hasn’t seen significant price inflation in years – really since the Great Recession of 2008/2009.

For the most part, the average inflation rate for the past decade has been just under 2%.

And at those levels, few social programs, and even employers, bothered with cost-of-living adjustments to payments and wages.

We’re now seeing annual inflation rates above 5%. And that is definitely being felt by the average American.

Which is why the Social Security Administration is providing a 5.9% cost-of-living adjustment for 2022. Without this increase, many Americans who rely on Social Security as their primary income source would see a significant erosion of their purchasing power.

Social Security Sustainability

I won’t get into the fact that the Social Security system is underfunded as it is, with estimates of the year 2034 being the year it will no longer be able to pay full benefits.

These increased payments – while a necessity to assist those on Social Security to maintain their current standard of living – won’t do anything to help Social Security’s long-term solvency.

But, as always, that’s an issue for another day.

Are Paychecks Next?

Right now, most Americans are hoping the increased inflation rate will stabilize in the coming months and decrease to a more reasonable level after that.

Only time will tell whether that will be the case.

With the Social Security Administration’s acknowledgment of the increased inflation rate by virtue of its COLA to recipients, the next question is will American businesses follow suit and provide workers a 5% cost-of-living increase, too?

Has your employer announced plans for a COLA yet?