Social Security checks getting big boost as inflation rises

Oct 12, 2021, 5:41 PM | Updated: Oct 14, 2021, 10:58 am
This Tuesday, Oct. 12, 2021, photo shows a Social Security card in Tigard, Ore.  Millions of retire...

This Tuesday, Oct. 12, 2021, photo shows a Social Security card in Tigard, Ore. Millions of retirees on Social Security will get a 5.9% boost in benefits for 2022. The biggest cost-of-living adjustment in 39 years follows a burst in inflation as the economy struggles to shake off the drag of the coronavirus pandemic. (AP Photo/Jenny Kane)

(AP Photo/Jenny Kane)

WASHINGTON (AP) — Millions of retirees on Social Security will get a 5.9% boost in benefits for 2022. The biggest cost-of-living adjustment in 39 years follows a burst in inflation as the economy struggles to shake off the drag of the coronavirus pandemic.

The COLA, as it’s commonly called, amounts to an added $92 a month for the average retired worker, according to estimates Wednesday from the Social Security Administration. It’s an abrupt break from a long lull in inflation that saw cost-of-living adjustments averaging just 1.65% a year over the past 10 years.

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.

But that’s just to help make up for rising costs that recipients are already paying for food, gasoline and other goods and services.

“It goes pretty quickly,” retiree Cliff Rumsey said of the cost-of-living increases. After a career in sales for a leading steel manufacturer, Rumsey lives near Hilton Head Island, South Carolina. He cares at home for his wife of nearly 60 years, Judy, who has advanced Alzheimer’s disease. Since the coronavirus pandemic, Rumsey said he has also noted price increases for wages paid to caregivers who occasionally spell him and for personal care products for Judy.

The COLA affects household budgets for about 1 in 5 Americans. That includes Social Security recipients, disabled veterans and federal retirees, nearly 70 million people in all. For baby boomers who embarked on retirement within the past 15 years, it will be the biggest increase they’ve seen.

Among them is Kitty Ruderman of Queens in New York City, who retired from a career as an executive assistant and has been collecting Social Security for about 10 years. “We wait to hear every year what the increase is going to be, and every year it’s been so insignificant,” she said. “This year, thank goodness, it will make a difference.”

Ruderman says she times her grocery shopping to take advantage of midweek senior citizen discounts, but even so price hikes have been “extreme.” She says she doesn’t think she can afford a medication that her doctor has recommended.

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.”

Policymakers say the adjustment is a safeguard to protect Social Security benefits against the loss of purchasing power, and not a pay bump for retirees. About half of seniors live in households where Social Security provides at least 50% of their income, and one-quarter rely on their monthly payment for all or nearly all their income.

“You never want to minimize the importance of the COLA,” said retirement policy expert Charles Blahous, a former public trustee helping to oversee Social Security and Medicare finances. “What people are able to purchase is very profoundly affected by the number that comes out. We are talking the necessities of living in many cases.”

This year’s Social Security trustees report amplified warnings about the long-range financial stability of the program. But there’s little talk about fixes in Congress, with lawmakers’ consumed by President Joe Biden’s massive domestic legislation and partisan machinations over the national debt. Social Security cannot be addressed through the budget reconciliation process Democrats are attempting to use to deliver Biden’s promises.

Social Security’s turn will come, said Rep. John Larson, D-Conn., chairman of the House Social Security subcommittee and author of legislation to tackle shortfalls that would leave the program unable to pay full benefits in less than 15 years. His bill would raise payroll taxes while also changing the COLA formula to give more weight to health care expenses and other costs that weigh more heavily on the elderly. Larson said he intends to press ahead next year.

“This one-time shot of COLA is not the antidote,” he said.

Although Biden’s domestic package includes a major expansion of Medicare to cover dental, hearing and vision care, Larson said he hears from constituents that seniors are feeling neglected by the Democrats.

“In town halls and tele-town halls they’re saying, ‘We are really happy with what you did on the child tax credit, but what about us?'” Larson added. “In a midterm election, this is a very important constituency.”

The COLA is only one part of the annual financial equation for seniors. An announcement about Medicare’s Part B premium they pay for outpatient care is expected soon. It’s usually an increase, so at least some of any Social Security raise gets eaten up by health care. The Part B premium is now $148.50 a month, and the Medicare trustees report estimated a $10 increase for 2022.

Economist Marilyn Moon, who also served as public trustee for Social Security and Medicare, said she believes the current spurt of inflation will be temporary, due to highly unusual economic circumstances.

“I would think there is going to be an increase this year that you won’t see reproduced in the future,” Moon said.

But policymakers should not delay getting to work on retirement programs, she said.

“We’re at a point in time where people don’t react to policy needs until there is a sense of desperation, and both Social Security and Medicare are programs that benefit from long-range planning rather short-range machinations,” she said.

Social Security is financed by payroll taxes collected from workers and their employers. Each pays 6.2% 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.

The financing scheme dates to the 1930s, the brainchild of President Franklin D. Roosevelt, who believed a payroll tax would foster among average Americans a sense of ownership that would protect the program from political interference.

That argument still resonates. “Social Security is my lifeline,” said Ruderman, the New York retiree. “It’s what we’ve worked for.”

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Associated Press

Closing prices for crude oil, gold and other commodities

Benchmark U.S. crude oil for November delivery rose 52 cents to $82.96 a barrel Tuesday. Brent crude oil for December delivery rose 75 cents to $85.08 a barrel. Wholesale gasoline for November delivery fell 1 cent to $2.48 a gallon. November heating oil rose 1 cent to $2.56 a gallon. November natural gas rose 10 […]
13 hours ago
Associated Press

Civil rights attorney seeks charges over inmate’s death

COLUMBIA, S.C. (AP) — A prominent civil rights attorney on Tuesday demanded that a South Carolina prosecutor revisit a case and criminally charge the two jail employees who stunned a mentally ill Black man 10 times and kneeled on his back until he stopped breathing. Ninth Circuit Solicitor Scarlett Wilson announced in July that the […]
13 hours ago
Associated Press

Vulnerable nations lay out demands for climate talks

LONDON (AP) — A group comprising dozens of nations particularly vulnerable to the effects of global warming have laid out their key demands ahead of the upcoming U.N. climate summit in Glasgow. These include getting rich countries to commit to fulfill and step up their pledges of financial assistance to help them battle climate change, […]
13 hours ago
In this Thursday, April 2, 2020, file photo, a manatee comes up for air is it swims in the Stranaha...
Associated Press

Manatee deaths rise in Florida as pollutants kill seagrass

TALLAHASSEE, Fla. (AP) — Manatees have starved to death by the hundreds along Florida’s east coast because algae blooms and contaminants are killing the seagrass the beloved sea mammals eat, a wildlife official told a House committee Tuesday. Seagrass has been decimated in the 156-mile-long Indian River Lagoon and neighboring areas. The aquatic plant thrives […]
13 hours ago
Firefighters work on a fire burning at the former Market Street Wharf early Sunday, Oct. 17, 2021, ...
Associated Press

Abandoned New Orleans wharf burns down; fireworks to blame?

NEW ORLEANS (AP) — The remains of an abandoned river wharf went up in flames over the weekend in New Orleans as fireworks went off nearby, but officials haven’t yet determined whether the display played a role in the enormous fire. The fireworks began around 10:30 p.m. on Saturday, The Times Picayune/The New Orleans Advocate […]
13 hours ago
Associated Press

Bulgaria makes virus pass mandatory for indoor venues

SOFIA, Bulgaria (AP) — Bulgaria is introducing a COVID-19 “Green Certificate” as a mandatory requirement for access to restaurants, theaters, cinemas, concert halls, gyms, clubs and shopping malls as the country faces a surge in coronavirus infections. Health Minister Stoycho Katsarov explained Tuesday that the new digital or paper health pass certifies that its holder […]
2 days ago

Sponsored Articles

...

How to Have a Stress-Free Real Estate Experience

The real estate industry has adapted and sellers are taking full advantage of new real estate models. One of which is Every Door Real Estate.
...
IQ Air

How Poor Air Quality Is Affecting Our Future Athletes

You cannot control your child’s breathing environment 100% of the time, but you can make a huge impact.
...
Swedish Health Services

Special Coverage: National Prostate Cancer Awareness Month

There are a wide variety of treatment options available for men with prostate cancer. The most technologically advanced treatment option in the Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform.
...
Marysville Police Department

Police Opportunities in a Growing, Supportive Washington Community

Marysville PD is looking for both lateral and entry level officers. Begin or continue your career in law enforcement for a growing, supportive community.
...
Comcast

Small, Minority-Owned Businesses in King County and Pierce County Can Now Apply For $10,000 Relief Grants Through Comcast RISE

Businesses in King County and Pierce County can apply beginning on October 1, 2021, at www.ComcastRISE.com for a chance to receive a $10,000 relief grant.
Courtesy of JWatch Photography....
Experience Anacortes

Summer Fun Activities in Anacortes

With minimal travel time required and every activity under the sun, Anacortes is the perfect vacation spot for all ages.
Social Security checks getting big boost as inflation rises