When did COLA 2022 increase take effect?

The cost-of-living-adjustment (COLA) rise of 5.9 percent came into force on January 1, 2022.

The COLA is calculated based on data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures changes in the cost of popular goods and services.

Who’s pushing for a fourth stimulus check, continued

It sent a letter to members in the House and Senate urging them to consider a targeted stimulus.

It argues that money is necessary for seniors to survive and keep food on the table.

Shannon Benton with the Senior Citizens League told The Sun: “We have received hundreds of emails from people concerned about making ends meet. 

“The high cost of living adjustment, for many, just exacerbated their financial woes by bumping their income above program limits to qualify for medicare savings programs and extra help.”  

Who’s pushing for a fourth stimulus check?

According to the , nearly five million Americans aged 65 and older lived in poverty in 2019.

With millions on a fixed income or living at or below the poverty level, the Senior Citizens League continues to push to get another stimulus check into the hands of seniors.

The group  in August 2021.

It’s garnered more than 100,000 signatures.

In addition, it continues to lobby Congress for another stimulus check.

How is COLA calculated?

The Social Security Act has a specific formula for calculating cost-of-living adjustments (COLA).

“COLAs are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). CPI-Ws are calculated on a monthly basis by the Bureau of Labor Statistics,” the  shared.

Social Security isn’t enough to live off of

The majority of people are  on Social Security.

It will give 30 percent to 40 percent of your pre-retirement income on average.

Because you’ll have multiple streams of income to supplement Social Security, the more you put in a retirement plan like a 401k or IRA, the more flexibility you’ll have in controlling your retirement spending.

Funding Social Security, part two

The SSA website says $1.001trillion, or 89.6 percent, of total Old-Age and Survivors Insurance and Disability Insurance income, came from payroll taxes in 2020.

The remainder was provided by interest earnings of $76billion (6.8 percent) and revenue from taxation of OASDI benefits $41billion (3.6 percent).

How is Social Security funded?

Social Security is funded through a dedicated payroll tax.

Employers and employees each pay 6.2 percent of wages up to the taxable maximum of $142,800 in 2021, while self-employed Americans pay 12.4 percent, according to the .

Understanding COLA, part three

Inflation rates throughout the 1970s varied from 3.3 percent to 11.3 percent.

In 1975, the COLA was increased by 8 percent, while inflation was at 9.1 percent.

In 1980, the COLA hit its highest point in history, at 14.3 percent, against a 13.5 percent inflation rate.

Small COLA increases of 2 to 3 percent per year were common throughout the 1990s, thanks to dramatically reduced inflation rates.

Even lower inflation rates in the early 2000s resulted in no COLA adjustments in 2010, 2011, and 2016. In 2022, the COLA will be 5.9 percent, up from 1.3 percent in 2021.

Understanding COLA, continued

In 1975, Congress adopted a COLA provision that provided automatic yearly COLAs based on the annual increase in the CPI-W.

Prior to 1975, Congress enacted special legislation to boost Social Security payouts.

COLAs in 1975 were calculated using the rise in the CPI-W from the second to the first quarter of 1974.

They were based on increases in the CPI-W from the previous year’s first quarter to the current year’s first quarter from 1976 to 1983; since then, COLAs have been based on the CPI-W from the previous year’s third quarter to the current year’s third quarter.

Understanding COLA

Because inflation was significant in the 1970s, COLAs were utilized to safeguard compensation-related contracts, real estate contracts, and government benefits.

The CPI-W is determined by the Bureau of Labor Statistics (BLS), and it is used by the Social Security Administration (SSA) to calculate Colas.

The Cola formula is calculated by multiplying the percentage rise in the CPI-W from one year’s third quarter to the next year’s third quarter.

On the SSA website, this information is updated on a regular basis.

Future of CTC payments unknown

The future of child tax credit payments remains uncertain, with no checks expected to be sent out to Americans in January.

But, officials are considering handing families a double stimulus check in February.

States such as California are offering financial assistance to cash-strapped residents, with Golden State stimulus payments being mailed to homes until January 11.

Paper checks, worth up to $1,100, should arrive three weeks after being deposited.

How do birthdates affect payments?

Anyone whose birthday falls between the 1st and the 10th can expect to get their money on the second Wednesday of each month.

If your birth date is on the 11th-20th, the payment will be deposited on the third Wednesday of each month.

Americans with a birthday that falls between the 21st and the 31st of the month can expect to get their check on the fourth Wednesday of each month.

Other increases

The spouses of retired workers will receive a boost of $47, taking average payments from $794 to $841.

Disabled employees will pocket an extra $75 on average as their check increases to $1,358 a month from $1,253.

Meanwhile, a small group will be receiving an extra $200 or more per month on their benefit check.

$92 increase for retirees

Since January 12, the COLA payments have been 5.9 percent larger this year than in 2021.

The $92 increase for retirees is the most significant COLA bump since 1982.

The increase came into effect on January 1 as inflation continues to reach record highs across the country amid the supply chain crisis.

New job? Wait to claim

Some of how much you earn in Social Security checks is weighed by your earnings history.

If you haven’t earned a lot in your working history, and you just got a better-paying job, it would make sense to continue to build up your benefits.

Currently, the maximum taxable wage is $142,800 in 2021, but that will be boosted to $147,000 next year. 

Once your earnings exceed that wage cap, you don’t get taxed on it for Social Security.

Also, many employers have been boosting wages in efforts to lure workers in the past year or so.

Waiting to claim social security might be a good opportunity to improve your earnings history.

Inflation: What is causing it?

There are various reasons why inflation is occurring. The first reason is that since Russia’s invasion of Ukraine, oil prices have risen dramatically.

As a result, petrol and other transportation expenses have increased.

Furthermore, in order to stimulate the economy, the Federal Reserve has kept interest rates low.

As a result, more individuals are borrowing and spending money, contributing to inflation.

Finally, salaries have been increasing in recent years, putting upward pressure on pricing.

Inflation: Current rate, continued

In January, the “core” consumer price index gained 0.6 percent, the same as in December, excluding the more volatile food and energy indexes, according to .

Household furnishings and operations indexes grew by 1.3 percent, used automobiles and trucks by 1.5 percent, medical care by 0.7 percent, and clothes by 1.1 percent.

Despite prior statements by Federal Reserve Chair Jerome Powell that the impacts would be temporary, the surge in consumer prices looks to be staying around.

Manufacturers have boosted prices across the marketplace, from food to household products to vehicle components, as demand has risen and moved, backing up supply chains and ports.

Inflation: What is the current rate?

Consumers in the US continue to be stung by high costs, with inflation rising faster than predicted to  over the previous year, surpassing the 40-year record established in December.

According to the Bureau of Labor Statistics’ most recent publication of the monthly Consumer Price Index on Thursday, price rises were most apparent in food, power, and housing.

The food and energy indices both increased by 0.9 percent, while the shelter index increased by 0.3 percent.

Inflation: What is it?

Inflation is  as the rate at which prices rise over time.

It’s usually a broad metric, such as the general increase in prices or the growth in a country’s cost of living.

Inflation fears, continued

Some retirees don’t think they’ll be able to cover Medicare costs despite the COLA bump.

Medicare’s Part B monthly premium for 2022 will increase from $148.50 to $170.10. The $21.60 jump is the largest price hike in the program’s history.

Part B of the package covers doctor visits and other outpatient services like screening.

When the price hike was announced, Centers for Medicare & Medicaid Services (CMS) officials stressed that the 14.5percent increase would be covered by this year’s COLA.

Inflation fears

Some beneficiaries are already fearing that despite the cash boost, the payments will not be able to cover the costs of inflation.

Inflation rose by 6.8percent between November 2020 and November 2021.

One person tweeted: “Ya, I got a whole 30$ raise that will help with the cost of everything rising lol.”

Another commented: “My Social Security only went up $52 that doesn’t even help me pay for my gas bill.”

COLA’s impact on seniors, continued

According to the , healthcare costs and housing costs have gotten 145% percent and 118% more expensive, while COLA’s have increased Social Security checks by just 55% since 2000.

Social Security claimants have lost 32% of their purchasing power, according to a study by the non-partisan group.

But things could get worse next year, according to Seniors Citizens League analyst Mary Johnson.

She said: “It appears that inflation is not done with us yet, and the buying power of Social Security benefits may continue to erode into 2022.”

COLA’s impact on seniors

The latest data on inflation from the Bureau of Labor shows that consumer prices rose 5.4% in the year to September – a troubling trend for seniors relying on Social Security checks.

Typically, inflation triggers when the supply doesn’t meet the demand – resulting in rising prices across the economy.

Everything in necessities from food to gas has gotten much more expensive.

Furthermore, the Congressional Research Service projects Medicare Part B premiums will spike from $148.50 to $157.70 per month.

Recent cost-of-living adjustments

The 2022 COLA is the biggest increase since a 7.4percent hike in January 1983.

 according to the Social Security Administration include:

• January 2012 — 3.6%
• January 2013 — 1.7%
• January 2014 — 1.5%
• January 2015 — 1.7%
• January 2016 — 0.0%
• January 2017 — 0.3%
• January 2018 — 2.0%
• January 2019 — 2.8%
• January 2020 — 1.6%
• January 2021 — 1.3%
• January 2022 — 5.9%

Benefits depend on retirement age

The full amount of your SSI benefit depends on the age you retire.

If you retire at 67, which is the full retirement age, in January 2022, your maximum benefit would be $3,345.

If you retire at age 62 in 2022, your maximum benefit would be $2,364, according to the .

If you retire at age 70 in 2022, your maximum benefit would be $4,194.