SOCIAL Security recipients could soon see the highest yearly cost-of-living adjustment (COLA) since the 1980s.
The 8.6 percent increase would mean that the average benefit would climb by about $143 per month to $1,800, whereas the maximum would jump by roughly $361 to $4,555.
The estimate comes after the Consumer Price Index (CPI) reached 8.5 percent in March - the largest 12-month increase since December 1981.
Benefits from Social Security are calculated annually using a cost-of-living adjustment (COLA).
Read our COLA 2022 increase live blog for the latest news and updates...
Four changes every year
There are at least four changes that occur every year when it comes to Social Security:
- Cost-of-living adjustments
- Earnings test limit
- The value of a work credit
- Social Security tax limit
Why does Social Security tend to not go far?
The maximum benefit is $3,345 a month for someone who files for Social Security in 2022 at full retirement age (FRA).
FRA is the age at which you qualify for 100 percent of the benefit calculated from your earnings history.
This is $40,140 annually. However, the average rent in the United States is about $1,100 to $1,200.
This leaves a retiree with $25,740 annually, which is just above the poverty line.
When you plan for retirement, it’s important to remember that Social Security is only meant to cover about 40 percent of pre-retirement income.
Recipients can get additional $2,400 yearly
If a new plan recently submitted to Congress is passed, Social Security beneficiaries might get an extra $2,400 in payments each year.
Seniors would undoubtedly appreciate this since rising inflation has eliminated their yearly cost-of-living adjustments.
US Rep. Peter DeFazio and US Sen. Bernie Sanders proposed the Social Security Expansion Act on June 9, per GoBankingRates.
Anyone who is already receiving Social Security benefits or who will reach 62 in 2023 would get an additional $200 per month under the rules of the measure.
Who would benefit from a COLA rise?
Around 70million Americans get Social Security benefits, many of these elderly.
The elderly are said to have been particularly badly struck by Social Security's inability to keep up with inflation, per Marca.
This is a result of the rising cost of healthcare.
Many are urging the government to do more to assist individuals who are being left behind since the purchasing power of Social Security has decreased by 10 percent in the past year.
How much will Americans receive with expected COLA?
Using the 8 percent figure that is expected for an increase, the new average monthly Social Security payments could look something like this, according to Marca:
- Retired worker: 1,791 dollars
- Retired worker's spouse: 908 dollars
- Elderly widow: 1,679 dollars
- Disabled widow: 883 dollars
- Disabled worker: 1,467 dollars
Americans waiting on Biden decision on gas tax
This week, President Joe Biden is anticipated to make a statement addressing both the issue of rising petrol costs and the crushing student loan debt, providing Americans with answers to their questions.
According to GoBankingRates, Biden said on June 21 that he hoped to decide shortly whether or not to support a nationwide gas tax holiday. He also said that he is about ready to decide on student loan relief.
When asked whether he favors a gas tax holiday, Biden told reporters during a news conference in Delaware, "I hope to have a decision based on the data I’m looking for by the end the week."
Southern states affected by inflation
According to a recent Merchant Maverick analysis, those living in Southern states may experience a greater financial blow than people living elsewhere.
The organization looked at the states where inflation is growing the quickest and the extent to which local conditions may put a financial strain on households, GoBankingRates reported.
One of the main conclusions is that the South is being most negatively impacted by inflation, which is driving prices up and quicker there than elsewhere in the nation due to lower median family incomes.
If you are unable to manage funds
Sometimes, people who receive Social Security benefits are not able to handle their own financial affairs.
In those cases, the SSA will conduct a careful investigation, and then appoint a relative, friend or another individual or organization to handle their Social Security matters.
All in all, when any of these events happen, you should notify the SSA immediately.
Schedule of benefits for 2022
Social Security benefits are released on a schedule according to a claimant’s date of birth.
Those with a birthday between the 1st and 10th of the month can expect their first payment on the second Wednesday of the month.
The third Wednesday of the month is reserved for those with a birthday between the 11th and 20th.
Claimants with birthdays between the 21st and 31st can expect to receive payments on the fourth Wednesday of the month.
This schedule holds steady through the 2022 calendar year.
How scammers work, continued
Scammers may try to threaten you with arrest if you do not pay a supposed fee or fine.
Scammers have also sent pictures of fabricated government badges, use false identification numbers, and mail using fake Social Security Administration letterhead.
“The Social Security Administration will never tell someone to wire money, buy gift cards or pay with cryptocurrency,” said Gail Ennis, inspector general at the Social Security Administration.
“If anyone does ask you that, you know it’s a scam.”
How scammers work
The acting commissioner of the Social Security Administration Kilolo Kijakazi said scammers use fear in order to get people to act without thinking, during a press call in March.
Fraudsters use a number of tricks to try to gain important personal information such as your Social Security number or bank account details.
How many scams are reported?
It has already received more than 31,000 Social Security-related scam complaints this year.
Many more incidents possibly go unreported due to shame or embarrassment, government officials say.
Reporting Social Security scams
If you suspect an email you got from the Social Security Administration may be fraudulent, you’re urged to avoid responding or clicking on any links in the message.
The SSA said you should report the email by forwarding it to the US Computer Emergency Readiness Team (US-CERT) at [email protected].
Avoiding Social Security scams
The Social Security Administration said Americans can avoid fraudulent calls and internet “phishing” schemes by not revealing personal information, clicking malicious links, or opening suspicious attachments.
The agency said most emails from Social Security will come from a “.gov” email address.
If an email address does not end in “.gov”, use caution before opening attachments or clicking on pictures or links.
You can learn more about how to protect your personal information and online account on the administration’s security webpage.
‘Concerned about making ends meet’
The Senior Citizens League launched an online petition in August 2021 to get seniors a $1,400 stimulus check.
It has over 100,000 signatures.
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.”
Seniors living in poverty
According to the Congressional Research Service, 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.
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 percent 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.
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.
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.
How long do you have to wait for benefits?
Every year, Social Security payments are distributed to millions of elderly and disabled Americans.
Social Security payouts are divided into three categories: retirement, survivor, and disability.
The Social Security Administration (SSA) typically takes six weeks to process your application and begin providing benefits.
This time period, however, might vary.
Who qualifies for Social Security?
To qualify, seniors must have worked for a certain number of years and paid into the Social Security system for a certain amount of time.
The amount received depends upon when you were born, your earnings history, and when you begin to claim benefits.
Some households are also subject to paying taxes on their Social Security benefits, usually if significant additional earnings, including wages, self-employed earnings, dividends, or other taxable income.
It’s important to note that Supplemental Security Income (SSI) differs from monthly Social Security benefits. SSI payments are not taxable.
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.
Once your earnings exceed the wage cap, you don’t get taxed on it for Social Security. Also, many employers have been boosting wages in an effort to lure workers in the past year or so.
Waiting to claim Social Security might be a good opportunity to improve your earnings history.
Next year’s increase, continued
Congress must take action in order to stop the change caused by high inflation.
Ms Johnson said that the TSCL supports federal legislation that would provide a minimum COLA and attached an index that better tracks the costs of Social Security recipients.
“Surveys by The Senior Citizens League have found strong support (around 63 percent of survey respondents) for providing 3% minimum COLA,” she added.
Currently, the COLA is calculated based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures changes in the cost of popular goods and services.
Democratic congressman John B. Larson of Connecticut proposed a bill in the fall that would switch the index to the CPI-E, which would track the costs of services and goods that seniors typically use.
But it’s unclear if the bill will pass despite it having hundreds of co-sponsors.
Next year’s increase may be bad news
Despite the COLA adjustment, TSCL said that high inflation has lowered Social Security claimant’s buying power by 40 percent since the year 2000.
Also, the TSCL added that “COLAs have increased Social Security benefits by a total of 64 percent, yet typical senior expenses through March 2022 grew by more than double that rate – 130 percent.”
The issue is Medicare Part B premiums, prescription costs, and other healthcare expenses aren’t “fairly” measured by the current index that benefits are tracked by, Mary Johnson, Social Security analyst with TSCL told The Sun.
Next year’s benefit
As a result, The Senior Citizens League is tweaking its 2023 COLA to 8.6 percent, which means Social Security checks would rise on average by $143 per month.
The maximum benefit would jump by $361 to about $4,5555 per month.