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Record Social Security COLA Coming

Category: Financial and taxes in retirement

October 13, 2021 — Social Security and Supplemental Security Income (SSI) beneficiaries will receive a record 5.9 percent Cost of Living Adjustment (COLA) for 2022. It is the largest COLA since 1982. The increase is based on the Consumer Price Index (CPI-W) from the third quarter of 2020 through the third quarter of 2021. It translates to a $92 monthly increases for the average Social Security recipient, which will be welcome news to people seeing consumer prices rising all around them because of the pandemic and worldwide shortages. According to the SSA, 37% of men and 42% of women get at least half their income from Social Security.

The maximum taxable earnings (OASI) for 2022 will increase from $142,800 to $147,000 in 2022. The retirement earnings exemption limit increases by $600 to $19,560 ($1 withheld for every $2 dollar over that until Full Retirement Age). In the year someone reaches Full Retirement Age the exemption limit increases by $1,440 to $51,960 ($1 deducted for every $3 over the limit). Here is a link to the Social Security Fact Sheet.

Comments? Do you think the COLA will be enough to offset what you are seeing happen to your budget? Please share your thoughts in the Comments section below.

For further reading:
Overlooking Spousal Benefit Could Leave Him Clipping Coupons

Posted by Admin on October 13th, 2021

8 Comments »

  1. Of course not. It’s welcome non the less.

    by Tim — October 13, 2021

  2. Inflation is actually higher than is reported. My deductible on my drug plan went up to $40.00 while the monthly premium went down to $4.00. Medicare will go up to possibly $158.00 per month and you can bet the deductible will also rise. Energy bills will rise as well and food is already skyrocketing! I am grateful for the increase, no doubt about it, however, it really will not cover rising expenses.

    by Jennifer — October 14, 2021

  3. Whether the SS COLA increase will help that much or keep up with your own inflation needs depends significantly on the amount of your current retirement SS payment. If your payment is average (about $1,550), even a 5.9% increase may not help much, but it’s a lot better than last year’s 1.3%. We scrimped (sacrificed) a lot so I could wait until age 70 to take SS at the highest payment amount for me. Because of that, both of our SS payments currently amount to about $59,000 annually. Adding 5.9% to that will make a pretty good difference – to about 62.5k. I guess my purpose in this post is to encourage folks to wait until 70 to begin SS payments, if possible. And that’s a big IF. Working with a qualified fiduciary financial planner is important as you get ready for retirement and Social Security.

    by Clyde — October 14, 2021

  4. Of course, with two people collecting SS then there is more money in the household. Not everyone has a spouse to help out financially. I am tired of those who love to parade their abundance! I am happy for you however, some of us are single and circumstances may have made it difficult or impossible to wait until 70 to collect our benefits. I am supplementing my SS with a part-time job I love because I am concerned about inflation and if I want anything extra like trips–I may not have the extra money–I did not get a pension and was never offered one my whole career as a nurse. I do have a higher than average SS payment, but still with the increase of 5.9%, while it is nice,it is no real windfall. Medicare premiums and deductibles will likely take a large part of it. This winter energy costs may skyrocket and I doubt even an extra $100.00 a month will go far with inflation as we now have it.

    by Jennifer — October 15, 2021

  5. Inflation is far higher than 5.9% and rising! The increase will be eaten up by the increase in my Medicare Supplement. I started taking SS at age 65 after a serous health diagnosis, which made longevity questionable. I would like to see more help for senior citizens that this meager COLA increase. To cover actual inflation, it should be 10%. It is also time for them to stop taxing SS payments! The thresholds were set in 1983 at total combined income(including SS) of 25k. SS payments should be exempt from all taxation! Double taxation is wrong and hurts senior citizens who are really struggling. The year ahead looks really challenging for most seniors, especially single seniors.

    by Maimi — October 15, 2021

  6. The COLA does not rise with inflation — it rises with an increase in the CPI. Look up the costs that go into the CPI. Most will be amazed that many of the day-to-day expenses we have are not included in the CPI. Some are the biggest hits to our actual cost of living.

    by RichPB — October 15, 2021

  7. Sometimes it’s appropriate to use raw numbers to illustrate a point. In my case they were used to show the impact of delaying the claim for Social Security benefits. I was certainly not intending to show any love for parading our abundance. In fact, our total income is a bit below the US average for couples of our age (Census Bureau 2021) and we have no pensions. My comment was designed primarily for readers of this site who are still in the pre-claiming ages for SS, generally 45-65. I’m fully aware that, for various appropriate reasons, many will not be able to utilize the delaying technique. We have also always given 10% of our gross income (even in the leanest of years), to worthy charities and that has reduced our spendable income annually. Speaking of charitable giving, remember that if you’re 70 1/2 or older and have an IRA (regular or rollover), you can use the Qualified Charitable Deduction (QCD) to make charitable gifts. Using the QCD usually gives you an excellent tax-savings benefit, even if you don’t itemize. Just do an internet search on the QCD and you should find plenty of helpful information.

    by Clyde — October 16, 2021

  8. Nobody is going to get rich from this COLA whether they are a one or two person income family. We all know when we see an increase in COLA, other costs go up so we are lucky to break even in the end. I believe that is what the COLA is meant to do. SS was never meant to be a sole income but a supplement to savings, pensions and other retirement programs. Not everyone has those other things to fall back on.

    We need to teach our children from an early age to plan for retirement. Not easy to convince young people to save for a time that is so far into the future. They have other things on their minds like new cars, college debts, marriage, buying homes, kids daycare, divorce. But, it is an important part of life’s puzzle. You have found a solution to work part time at a job you love. Some older people can’t even work due to illness and not too many companies are looking to hire older people.

    by Louise — October 16, 2021

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