Social security recipients may be in for a big pay raise.
The cost of living adjustment (COLA) for the coming year is expected to jump by 6.2% amid increasing inflation in the U.S. economy – including two recent months of 5.4% gains in consumer prices. (Story continues below.)
This would be the highest increase in almost four decades, according to the Senior Citizens League and the second largest on record. In 1983, the cost of living adjustment was 7.4%.
Social Security benefits are one of the few types of income in retirement adjusted for inflation. “But,” the league said in a statement, “soaring inflation can still knock a hole in the household finances of retired and disabled Social Security recipients.”
For example, in 2021 Social Security benefits increased by just 1.3 percent raising the average benefit by about $20. Yet, 86 percent of Social Security recipients told the Senior Citizens League that their expenses increased by much more than that amount.
The COLA is calculated based on the July, August, and September Consumer Price Index reports. July has already clocked in at 5.4% and, given the recent record breaking 7.8% increase in producer prices, the August CPI read is expected to be higher than 5.4%. This is partly why the league anticipates a overall gain of at least 6.2%.