It’s a good news/bad news scenario for those collecting Social Security.
Starting next year (2022), you’ll get more money, a lot more, but it will be to cover rising costs. Here’s a closer look at what to expect.
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Social Security benefits increasing, but so are costs
Whether you’re picking up shampoo or buying cereal, you’ve noticed price hikes. Everything costs more. Now the government is working to put more money in the pockets of seniors.
“Extra is always good, especially in today’s economy,” said Cheryl, who is retired and collects Social Security.
Cheryl is bargain shopping more than ever before because it seems almost everything is more expensive since the start of the pandemic.
“I’ve noticed even the scarcity of products, so even if you find what you want, you’re going to pay exorbitant prices every day, and I shop often,” she said.
The good news/bad news
Those collecting Social Security will receive an annual cost of living adjustment (COLA):
- A 5.9% jump in payments starting in 2022
- This is the largest such increase since 1982.
- This will boost payments by $92 a month.
- This will increase the estimated monthly average for a Social Security recipient to about $1,657. That means a typical couple’s benefits would rise by $154 to $2,753 per month.
The COLA affects household budgets for about 1 in 5 Americans. That includes Social Security recipients, disabled veterans and federal retirees. That’s nearly 70 million people in all, according to the Social Security Administration. This is the biggest such increase Baby Boomers will see since they began retiring about 15 years ago.
With so many things from the supermarket to shipping costing even more, that big increase may not have a big impact.
“Everything costs more, particularly for seniors,” said financial expert Kirk Cassidy. “So they needed to make the increase so people could maintain their quality of living.”
What to do now
Cassidy said it is critical for those on a fixed income to review all expenses and stick to a budget.
“They really need to understand retirement planning and budgeting is very different than when they were younger and they were accumulating wealth. It is now about the distribution of your wealth and understanding what your money can do for you and some of the challenges you’ll face from a cost perspective,” he said.
It is all about budgeting right now as prices continue to tick up. As for the money -- the increase -- you’ll see it, but not until 2022.