Americans who receive social security payments from the federal government will get an almost six per cent increase in benefits from the beginning of 2022.
The Social Security Administration said on Wednesday that a 5.9 per cent increase in payments is required to counter the current spike in inflation caused by supply chain bottlenecks, labour shortages, and other Covid pandemic-related economic disruptions.
The larger checks will be sent to almost 70 million people, with most seeing the change in January. That includes social security recipients, disabled veterans, and federal retirees.
Some 8 million Americans who receive benefits from the Supplemental Security Income program will see increased payments from the end of December.
Beneficiaries of the higher payments will be notified in December about the dollar amount of their new benefits. The average retired worker will receive $92 more a month. In 2021 the increase was approximately $20.
With the increase, the estimated average Social Security payment for a retired worker will be $1,657 a month next year. A typical couple’s benefits would rise by $154 to $2,753 per month.
Some 40 per cent of beneficiaries depend on the monthly checks for 90 per cent of their income, and it makes up about half the income for approximately two-thirds of recipients.
AARP CEO Jo Ann Jenkins called the government payout increase “crucial for Social Security beneficiaries and their families as they try to keep up with rising costs.”
Data released by the Bureau of Labor Statistics showed that prices rose by 5.4 per cent in September on an annualised basis, and inflation rose by 0.4 over August.
The latest Consumer Price Index shows where inflation is hitting Americans the hardest. Some of the most notable price increases since September 2020 include: Rental cars (43 per cent), Gas (42 per cent), Used Cars (24 per cent), Bacon (19 per cent), Hotels (18 per cent), Eggs (13 percent), and Furniture (11 per cent).
Each year the Social Security Administration calculates the Cost-of-Living Adjustment (Cola) for the forthcoming year. Typically it increases between one and two per cent, averaging 1.65 per cent over the past ten years.
The last time it reached similar levels was at the height of the Great Recession when benefits were increased by 5.8 per cent for 50 million people.
The biggest cost-of-living adjustment occurred in 1982 at the start of the Reagan administration when inflation was a similar concern.
Social Security is financed by payroll taxes collected from workers and their employers. Each pays 6.2 per cent on wages up to a cap, which is adjusted each year for inflation.
Next year the maximum amount of earnings subject to Social Security payroll taxes will increase to $147,000.
With reporting from the Associated Press