Social Security COLA 2022 Explained

By Brent Meyer — SafeMoney.com Founder & Editor Reviewed by Licensed Financial Professionals  |  SafeMoney.com — Trusted Since 2011  |  Updated Regularly Quick Answer: Discover the 5.9% Social Security COLA for 2022 and how it impacts your retirement planning. Learn more at SafeMoney.com. What sort of increase in Social Security benefits will benefits recipients see for 2022? The official word is out, and there will be a record-breaking 5.9% cost of living adjustment (COLA) to benefits for next year, according to the Social Security Administration. In 2021 , Social Security had a 1.3% COLA to benefits, which was slightly smaller than the 1.6% increase of 2020 . But in 2022, Social Security recipients will get a boost in benefit payments that is over four times the average COLA from these past two years. This coming COLA of 5.9% is also the largest increase in almost 40 years. This has been done in an effort to keep up with the runaway inflation that has gripped America. The consumer price index shows that the price of retail goods has risen by an astounding 5.4% in 2021, at the time of this writing. The pandemic has also disrupted much of the United States’ economic infrastructure and caused job losses. Retirees who depended on part-time work and other income sources were hit, so the COLA adjustment will help offset the decline in their incomes. How Are Social Security COLAs Calculated? The cost of living increase is calculated each year based on the Consumer Price Index for Urban Wage Earners and Clerical Workers. This is also known as “CPI-W” for short. The CPI-W is calculated each month by the Bureau of Labor Statistics, using eight major categories of spending and numerous subcategories. Each category and subcategory are assigned an appropriate weighting. A COLA is implemented in any year where the index is measurably higher than it was the year before. One major driver of the spike in the COLA for 2022 is the price of oil and other forms of energy. Oil and gas prices have hit multi-year highs, according to the Bureau of Labor Statistics. The prices of food, medical care , and shelter have risen substantially as well. Costs of beef, eggs, and poultry has increased by double-digit percentages. The projected increase in the cost of Medicare Part B premiums, by $10 per month in 2022, is yet another example.   How Much More in Benefits Will Recipients Get? The COLA increase means that the average Social Security recipient will