Social Security Benefits Are Going Up In 2022, But By How Much?
As life slowly begins to resume some normalcy in the wake of the COVID-19 pandemic, there’s a bright spot looming in terms of cost of living: Individuals who receive Social Security Income (SSI) can expect the largest raise in nearly four decades. The cost-of-living adjustment (COLA) will affect more than 64 million Social Security beneficiaries in 2022.
Based on how inflation ran during 2020, Social Security’s cost of living adjustment for 2021, which began affecting payments in January, was 1.3%. The result? Benefit checks increased by an average of $20, according to The Senior Citizens League, a nonpartisan advocacy group.
The COLA increase for 2022 could be as high as 6.1%, the league says; the amount is determined by the government’s inflation numbers from the year’s third quarter (July, August, September). The upcoming increase in Social Security checks could be the largest since 1983, when the COLA was 7.4%.
While such a substantial increase in benefits is definitely welcome, there could be a downside to upping Social Security amounts. According to Mary Johnson, the Social Security and Medicare policy analyst at The Senior Citizens League, some recipients could experience reductions in other benefits because of their larger Social Security checks. “Higher income could lead to trims in food stamps, rental assistance, or Medicare Extra Help, which covers most prescription drug costs,” Johnson tells MoneyWise.
…And An Increased Need For Stimulus Checks
Larger Social Security checks are definitely a step in the right direction, but The Senior Citizens League says that older Americans can’t wait for the larger COLA to take effect in January of 2022. The group is calling on Congress to provide seniors with a much-needed income boost in the form of $1,400 stimulus checks for people on Social Security. Inflation and rising prices have put the squeeze on those who rely on a fixed income to cover the cost of essentials such as gasoline and home heating oil, both of which have seen significant price increases during the past year.
According to Rick Delaney, chairman of The Senior Citizens League, “We’ve heard from thousands of [seniors] who have exhausted their retirement savings, who have started eating just one meal a day, started cutting their pills in half because they can’t afford their prescription drugs.”
While waiting for increased Social Security benefits to go into effect, there are several things all Americans – including seniors – can do to help lessen the impact of runaway inflation.
Lower Your Mortgage Payment, Shop Smartly, and Invest Wisely
Now might be a good time to refinance your mortgage and reduce your monthly mortgage payment. Thirty-year mortgage rates have dipped below 3%; a new loan at that lower rate could save you hundreds of dollars every month. Zillow reports that nearly 50% of homeowners who refinanced over the year that ended in April are saving at least $300 each month.
When you shop online, check out multiple sites so that you can take advantage of bargains and money-saving offers such as free shipping. Consider downloading a browser extension that automatically searches for lower online prices and provides promo codes at checkout.
Give some thought – and do your research – about investing in farmland, which is a good hedge against inflation. New platforms are helping investors tap into this long-overlooked asset class that can offer more stability than the usual stocks and bonds. But if you’re thinking of checking out the stock market, it might be best to dip your toe in the water by starting small. Look into apps that allow you to invest in a diversified portfolio by using “spare change” that’s left over from your everyday purchases.