Social security benefits are increasingly important to the millions of people who receive them. This is because the Social Security Administration recently announced that benefit recipients are entitled to a 5.9% cost of living adjustment (COLA) in 2022.
COLAs occur most years to ensure that those who get the benefits don’t lose their purchasing power as prices rise. But while the Social Security increase has already been announced, you won’t see any additional money just yet.
The type of Social Security benefits you receive will determine when you can expect to receive your biggest checks.
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This is when your social security checks will increase
If you are one of the millions of Americans who currently receive Social Security retirement checks, you will start to see additional income in your payment arriving in January 2022. And if you are someone who receives Supplementary Security Income Benefits (SSI), you can expect to receive your first larger check by the next month. December 30, 2021.
This means retirees will enjoy their additional COLA benefits for the whole of next year, but will have to wait a little longer than SSI beneficiaries for their larger payments to arrive for the first time. SSI beneficiaries will also receive these larger payments for the whole of next year, although their first larger check will arrive in 2021.
Don’t get too excited about your big checks
While you might be happy to see more money coming from the Social Security Administration, it’s important to realize that periodic COLAs only occur when the consumer price index for urban wage earners and employees (CPI-W) shows that prices have increased year over year. .
In other words, while people generally call COLAs an “increase in social security,” COLA will not actually make you richer, as you might expect.
Instead, the extra money that starts coming in with your December 30, 2021 payment or with your January 2022 payment is designed only to ensure that you don’t to lose soil and that your purchasing power does not decrease when the prices of goods and services increase.
Unfortunately, a big benefit increase next year probably won’t even do it, as COLAs tend to not accurately account for the inflation that many Social Security recipients experience. This is because the CPI-W does not accurately reflect the price increases that are likely to hit seniors receiving retirement benefits the hardest. Older people spend differently from urban and office workers, and the CPI-W often underestimates the effects of some key spending increases.
Social security beneficiaries have been losing ground for decades, with the decrease in the purchasing power of services. This trend will most likely continue into 2022 as rising costs for food, shelter and healthcare will reduce the value of COLA. So even if you will see larger checks from the end of this year or early next year, you will need to make wise financial decisions about how you use the money to avoid a drop in your quality. of life.
Careful budgeting for the costs of inflation will be important even when larger checks arrive. This could mean, in some cases, exchanging more expensive items for more readily available and cheaper items, or taking advantage of senior coupons and discounts when they offer the opportunity to save.
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