Social Security beneficiaries could be in for a bigger cost-of-living adjustment next year, if current economic trends continue.
But just how much farther an increase to those monthly benefit checks will go will depend a lot on inflation.
The Senior Citizens League, a nonpartisan senior group, released its first official estimate for 2022 on Wednesday, indicating there could be a 4.7% bump to benefits starting next January.
If that estimates holds, that would be the biggest increase retirees and other beneficiaries have seen since 2009, when benefits jumped 5.8%. In 2021, the Social Security cost-of-living adjustment was 1.3%.
The increase is culled from the latest Bureau of Labor Statistics data for the Consumer Price Index for Urban Wage Earners and Clerical Works, or CPI-W. The Social Security Administration uses that index to calculate its cost-of-living adjustment each year.
To be sure, this estimate is preliminary and could change. The actual COLA for next year will be based on data through the third quarter.
The current estimate is based on a 12-month average inflation projection using data through April, according to Mary Johnson, Social Security and Medicare policy analyst at the Senior Citizens League.
Much of the data that contributed to the estimate has to do with higher energy and gasoline prices, Johnson said.
Because the data does not include May, it’s missing the after effects of a recent cyberattack on a major U.S. fuel pipeline, which has led to a run on gasoline and price spikes in certain parts of the country.
10 fastest growing costs for older Americans
|Item||Cost in 2000||Cost in March 2021||Percent increase|
|1.) Prescription drug out of pocket, generic, brand, specialty (per year out of pocket)||$1,102.00||$4,096.93||272%|
|2.) Medicare Part B premiums (per month)||$45.50||$148.50||226%|
|3.) Homeowner’s insurance (per year)||$508.00||$1,414.00||178%|
|4.) Veterinarian services||109.300*||285.180*||161%|
|5.) Home heating oil (per gallon)||$1.15||$2.86||150%|
|6.) Total medical out of pocket costs (per year)||$6,140.00||$14,846.00||142%|
|7.) Potatoes (10 lbs.)||$2.98||$6.98||134%|
|8.) Propane gas (per gallon)||$1.01||$2.30||127%|
|8.) Ground chuck (per lb.)||$1.90||$4.31||127%|
|9. Gasoline (per gallon)||$1.31||$2.86||118%|
|10. Real estate taxes (per year)||$690.00||$1,494.00||117%|
If inflation declines and the estimate stays the same, that will help improve seniors’ buying power, Johnson said.
“A lot will depend on if inflation holds until COLA is announced and then whether inflation starts slowly coming back down again, so that by January of 2022 it’s lower than it is today,” Johnson said.
The Social Security Administration typically announces next year’s adjustment in October.
Consumer price data through May shows that Social Security recipients have lost buying power, according to the Senior Citizens League’s research.
If current inflation trends continue, “the loss of buying power could grow deeper in 2021,” Johnson said.