The Social Security Administration has announced a 5.9% increase in benefits for 2022. This is a dramatic change over the 1.3% increase for 2021. During the past decade, the increases have generally been less than 2%. Approximately 70 million Americans will receive the increased payment amounts in January of 2022.
The increase is the result of substantial rises in the price of gasoline and other everyday purchases. With port congestion in Los Angeles and a limited number of trucks to deliver supplies, there are shortages of many goods and limited stock on store shelves. The shortages inevitably lead to higher prices.
The large Social Security cost-of-living adjustment (COLA), is a direct result of inflation during 2021. Social Security COLA is linked to the Consumer Price Index (CPI) for urban workers. However, the CPI inflation adjustment used for Social Security is often less than the actual rate of inflation for healthcare costs, Medicare premiums and homeowners' insurance.