THE ANNUAL Social Security cost-of-living (COLA) will see a positive adjustment in 2022.
The announcement marked the highest annual benefit increase for federal retirees in 40 years.
How much is the COLAs increase?
On Wednesday, the Social Security Administration announced that the COLA adjustment will be 5.9% increase.
According to reports, the compensation increases are measured based on the annual change in the "third-quarter consumer price index for workers."
The government's Civil Service Retirement System determine members' yearly pension boosts on that basis.
Because of this, those enrolled in the system will receive a 5.9% gain in their annuity payments in 2022.
The estimated average Social Security payment for a retired worker will be $1,657 a month next year. A typical couple’s benefits would rise by $154 to $2,753 per month.
The COLA affects household budgets for about 1 in 5 Americans. That includes Social Security recipients, disabled veterans and federal retirees, nearly 70 million people in all.
What is COLA?
Cost-of-living adjustments began when legislation was passed in 1973.
The intention is to use COLAs for Social Security and Supplemental Security Income (SSI) benefits to keep up with inflation rates, according to the Social Security Administration.
To calculate COLAs, the Social Security Act uses a formula.
"COLAs are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)," according to the Social Security Administration.
CPI-Ws are calculated on a monthly basis by the Bureau of Labor Statistics."
How does early retirement affect COLA?
If you choose to claim benefits before your full retirement age, you may receive less.
Waiting until full retirement age, which varies between 66 years and two months to 67 depending on when you were born, will give you a higher monthly payment.
Delaying your claim until age 70 will also help you receive maximum benefits.
What's next for COLA?
Those collecting Social Security benefits will see the COLA in January 2022.
For those who collect Supplemental Security Income, the increase goes into effect on December 30, 2021.
Payouts will begin for retirees depending on when you typically receive your payment.
The Social Security Administration has released a 2022 schedule of benefit payments to let you know when you'll receive yours.
The 5.9% increase for 2022 was determined on October 13, 2021.
The next COLA increase for 2023 will be determined in October 2022.
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