VIRGINIA BEACH, Va. – On Wednesday, the Social Security Administration announced a 5.9% annual cost-of-living adjustment (COLA) for 2022.
It says the increase is due to rising inflation.
Over the last 10 years, the Social Security COLA has averaged about 1.7% annually as inflation remained low. The economic recovery from the coronavirus pandemic has triggered rising prices for a wide range of goods and services, and that will translate to bigger checks for retirees.
Theresa Smith of Virginia Beach feels the increase is warranted.
“I’m glad we’re getting a raise because I think we deserve it, but the cost of living and everything is going up,” said Smith. “So, it’s going to kind of even itself out, I think.”
Old Dominion University economics professor Dr. Robert McNab gave a statement on the sizeable adjustment:
The 5.9% increase in Social Security benefits is certainly welcome news for retirees, those receiving Social Security disability benefits, and others. With the news today that the consumer prices rose 5.4% from September 2020 to September 2021, Social Security recipients are facing increasing prices for food, fuel, insurance, and other goods and services. Price increases will take a bite of the 5.9% increase next year, so after adjusting for inflation, the real (inflation-adjusted) increase in benefits is likely to be closer to 1.5%. While a 1.5% increase in real terms does not seem large, it is certainly better than the 1.3% increase in 2021, which, after adjusting for inflation, means that social security benefits will likely decrease in real terms by 1.5% to 2.0%, depending on how the remaining months of 2021 fare in terms of inflation.
Shawn Scharf is the manager at Sullivan House, a retirement community in Virginia Beach. He said the apartment complex is HUD-subsidized and residents pay no more than 30% of their income on rent. Based on the formula, their rent will increase.
Though Carol Wilson knows her rent will go up, she said she’s blessed to be in a place she enjoys and can afford.
“Our rent here is great,” commented Wilson. “I wouldn’t live anywhere else if I had a choice.”
About half of seniors live in households where Social Security benefits account for at least 50% of their income, and one-quarter rely on their monthly payment for all or nearly all their earnings.
Social Security and SSI beneficiaries are normally notified by mail starting in early December about their new benefit amount. Most people who receive Social Security payments will be able to view their COLA notice online through their personal Social Security account.