Social Security Myth: There Will Be a COLA Increase Every Year
Social Security beneficiaries are getting 5.9% more money in their checks this year than last year thanks to the biggest cost-of-living adjustment increase in four decades. The increase is meant to help offset inflation, which has been rising at a rate of 7.9% — also the highest in four decades.
See: Social Security Schedule — When First COLA Checks Will Arrive in April 2022
Find: Social Security 2022 — How the COLA Will Increase Benefits for the Average Senior Couple
Many might think a COLA increase is automatic every year, but that’s not the case. As the AARP noted in a recent article about Social Security myths, there’s no requirement that the Social Security Administration implement a yearly COLA increase.
The COLA is linked to a federal index of prices for select consumer goods and services called the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. Benefits are adjusted annually based on changes in the CPI-W from the third quarter of one year to the third quarter of the next, AARP noted. In 2021, the index showed a 5.9% increase in prices, hence the 5.9% COLA increase for 2022 payments.
This year’s COLA increase is much higher than the one provided for 2021, when it was only 1.3%. You have to go back to 1982 to find a bigger increase. That year, the COLA hike was 7.4%, according to the SSA. Prior to 1975, Social Security benefit increases were set by Congressional legislation.
There have been a few years when Social Security recipients didn’t get a COLA increase at all, and each happened this century: 2010, 2011 and 2016. This would only happen during years of low or no inflation. That’s not the case right now, of course, so Social Security recipients could see another hefty increase in 2023.
More From GOBankingRates
- Keep an Eye Out for Rare Dime Worth as Much as $2,000 -- How To Spot It
- What Is the State of Women & Money in 2023?
- Build Your Credit Score with These Simple Strategies
- Financial Insight in Your Inbox: Sign Up for GBR's Daily Newsletter
