The Social Security Administration has announced the biggest benefits boost in decades. A 5.9% cost of living adjustment (COLA) for 2022, will mean an extra $92 each month on average. While that’s certainly nothing to sneeze at, CNBC talked to experts who caution that money won’t go as far as you think.

Eaten Up By Inflation

One of the reasons we are seeing such a big COLA this year is because of inflation. We are paying more for expenses such as rent, gas, groceries, etc. So, the increase in benefits won’t necessarily mean more money in your bank account because it likely is already being spent on basic necessities.

Furthermore, Medicare expenses are increasing with Part B premiums expected to jump by $10 each month. Because Medicare is typically taken out of Social Security, some of that increase will be gone before you even see it in your check. CNBC says keep a lookout in December for a letter from Social Security explaining your check for next year.

Tax Time

Taxes are another concern. If Social Security is your only source of income, you shouldn’t see a change in taxes. But if you have other sources of retirement income – or you’re still working and also receiving benefits – you should expect to see an increase in your tax bill. Check in with your CPA or tax preparer to see how this COLA increase may impact you.

One and Done?

Just because we are seeing the biggest COLA in almost 40 years, experts say don’t expect a repeat next year. The last time there was a similar benefits bump – 5.8% in 2009 – there were no adjustments for the next two years.

We Need a New COLA Calculator

The Seniors Trust wants to prevent that from happening. It wants to see a fairer formula used to calculate the annual cost of living adjustment – one that considers how seniors spend their money.

The Social Security Expansion Act calls for using the Consumer Price Index for the Elderly (CPI-E) to calculate Social Security COLAs instead of the Consumer Price Index for Urban Wage Earners (CPI-W) used currently. The CPI-E takes the unique spending habits of seniors into account — particularly regarding the cost of healthcare — and offers a more realistic COLA for retirees. The Social Security Expansion Act also calls for an immediate increase in monthly benefits, which would greatly help boost retirees’ bank accounts.