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Social security benefits could rocket by $96 next year in biggest surge since 1983
Alice Grahns, Senior Digital Consumer Reporter
Updated: 7:26 ET, Aug 12 2021
SOCIAL security benefit payments could rocket by almost $96 a month for nearly 70million Americans next year.
This is due to an expected 6.2% raise in the cost-of-living adjustment (COLA), which is typically given to all recipients.
Social security benefit payments could rocket by $95 a month for nearly 70million Americans next yearCredit: Getty
The increase would be the biggest rise since the allowance rose by 7.4% in 1983.
The COLA is calculated based on data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures changes in the cost of popular goods and services.
When the CPI-W drops or stays flat, senior are generally denied a COLA.
However, when inflation and the CPI-W increase, they're given a raise - and consumer prices have rocketed recently.
What are social security payments?
SOCIAL security payments are made to retirees and their families, as well as to disabled people and their families.
But crucially, you have to have worked and paid into the Social Security scheme for long enough to get these benefits.
Survivors benefits are also paid to the families of workers who have died.
Social Security payments are funded through taxes taken under the Federal Insurance Contributions Act (FICA) or the Self-Employment Contributions Act (SECA).
Here's how to apply for Social Security.
You can estimate your future social security benefits with this calculator.
In the US, consumer prices rose by 5.4% in July compared with a year ago, according to data released yesterday by the Bureau of Labor.
It comes as inflation increased to 5% last month, which at the time was the highest rate seen in 13 years.
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As a result of the inflation, The Senior Citizens League, a nonpartisan senior group, now estimates the allowance will rise by 6.2% from January.
The projection is up from 4.7% in May and from 6.1% last month.
In comparison, the COLA for 2021 was just 1.3%, down from 1.6% in 2020.
Based on the average monthly social security payout in 2021 of $1,543, a 6.2% increase could mean an extra $95.67 a month for claimants.
The Social Security Administration (SSA) typically announces next year's adjustment in October.
Mary Johnson, a social security policy analyst for The Senior Citizens League, said: "The estimate is significant because the COLA is based on the average of the July, August and September CPI data.
"With one third of the data needed to calculate the COLA already in, it increasingly appears that the COLA for 2022 will be the highest paid since 1983."
Although it's not yet guaranteed, be aware that wishing for a generous COLA also means that inflation needs to holds steady and prices of consumer goods to remain high.
In other words, while an increase in COLA mean more income, you may find that you have to spend more money to cover living costs.
We round up 20 tips for living comfortably on your social security checks – including delaying taking your benefits.
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