Social Security Benefits 2022: How Medicare Will Significantly Impact Those Earning Less

Financial advisor explaining paperwork to elderly retired couple front of desk.
Inside Creative House / Getty Images/iStockphoto

The 5.9% raise Social Security recipients will get in 2022 is the largest in 40 years, but for those whose checks are not that big, the raise will barely be enough to offset higher Medicare Part B costs.

See: Social Security COLA — Seniors Will Receive the Highest Increase in Decades, But It’s No Match For 6.2% Inflation Surge
Find: Social Security Offices Will Not Open Jan. 3 as Proposed — How Does This Affect You?

Next year’s cost-of-living adjustment will increase the average retirement check by $92 to $1,657 a month, according to an analysis by AARP. The maximum monthly benefit for a worker who retired at full retirement age will climb by $197 to $3,345.

Even Social Security recipients who are lower on the financial scale will get a boost, with the maximum monthly payment for this group rising by $47 to $841 for individuals and by $70 to $1,261 for couples.

The big COLA hike for 2022 is in response to skyrocketing inflation, and therein lies one of the problems. With inflation running at more than 6% in recent months, the 5.9% COLA might be break-even at best. When you factor in the rising cost of heath care, many Social Security recipients will realize minimal gains.

Retire Comfortably

See: How To Enjoy Retirement on a Budget
Find: Alternatives To Social Security That Will Provide Income in Retirement

Medicare Part B premiums — which are deducted directly from most Social Security retirement payments — will rise to $170.10 per month in 2022, an increase of $21.60 from last year. That will “take an exceptionally large chunk” out of the COLA raise, said Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League.

“Your effective COLA, after deducting for Part B premiums, will be less than 5.9% and, depending on the size of your monthly Social Security check, may be a lot less,” Johnson wrote in an email statement to GOBankingRates. “Those with the lowest benefits won’t see as much left over.”

See: 10 Ways You Can Catch Up on Your Retirement Plan in Your 50s
Find: Debt-Free Future — Tips for Adapting To a FIRE Lifestyle

As AARP pointed out, someone with a $1,000 Social Security benefit in 2021 would have netted $851.50 a month after the 2021 Part B premium of $148.50 a month was deducted. Next year, that same person’s Social Security payment would rise to $1,059, but after deducting $170.10 for Medicare, the net payment would be $888.90 — just $37.40 more than in 2021.

Retire Comfortably

One problem is that the COLA is tied to the consumer price index and doesn’t take into consideration increases in Medicare Part B premiums.

“Surely there are many others like me who wonder how much higher Social Security benefits would be if our benefits were tied to the percentage of increase in Medicare Part B premiums instead of the consumer price index.” Johnson added.

More From GOBankingRates

Share this article:

facebook sharing button
twitter sharing button
linkedin sharing button
email sharing button
Retire Comfortably

About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
Learn More


See Today's Best
Banking Offers