Social Security benefits are expected to get a big boost for 2022 – possibly the biggest bump in almost 40 years. But, according to Yahoo! Finance, the approximately 6% cost-of-living adjustment (COLA) won’t make much of a difference. That’s because the cost of everything else is going up too.
The annual COLA adjustments are designed to make sure Social Security benefit payments keep up with inflation. This year’s numbers are way out of whack, mostly due to the pandemic. Everything from groceries to gasoline costs much more than it did last year, so any increase will be quickly absorbed just by paying basic bills.
The other issue is the rising cost of healthcare facing seniors. Yahoo! found that big budget changes are coming to Medicare for 2022. That’s because deductibles for Medicare Part A (hospitalization) and Part B (visits to doctors and testing) have increased, as have the Part B and recommended Part D (prescription drug) premiums. The Medicare Part B premium is predicted to go up 6.7% — that alone is higher than the expected Social Security COLA. In a nutshell, this means seniors will be spending a greater percentage of their money on medical-related costs next year.
The Seniors Trust believes the solution is simple. The Social Security Administration needs to adopt a new formula to calculate its annual COLA. One that takes the unique spending habits of retirees into account.
The Seniors Trust supports passage of the Social Security Expansion Act. It calls for using the Consumer Price Index for the Elderly (CPI-E) to calculate COLA instead of the Consumer Price Index for Urban Wage Earners and Clerical Workers currently used. By changing the way COLA is calculated, we can ensure that the unique expenses seniors face, such as larger housing and healthcare costs, are taken into account. This provides a much fairer cost-of-living adjustment.
The Social Security Expansion Act also calls for increasing monthly benefits by about $65 on average. That would also help put more money in the pockets of deserving retirees.