Every year, Social Security calculates a cost of living adjustment (COLA) in response to inflation. COLA is determined based on an increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers. As a result, Social Security and Supplemental Security Income (SSI) benefits are adjusted in response to an increase in cost of living. For example, in 2021, benefits increased by 1.3%.
According to the Senior Citizens League, a nonpartisan senior advocacy group, the estimated COLA increase for 2022 will be 6.2%. A contributing factor to the estimated COLA increase has been gasoline prices, which have risen 41.8% over the past year.
The anticipated increase will be the biggest boost in several years. In 1983, the COLA was 7.4% and in 2009, Social Security benefits were increased by 5.8%, which was the last time benefits increased by such a large margin.
Since the pandemic, inflation is on the rise and is currently at about 5%, which is the largest increase since 2008. COLA adjustments for 2022 are based on the inflation rate of the prior year, therefore there are still a few more months of data to be analyzed before an increase is confirmed. However, based on the current estimates, it is likely that Social Security recipients will receive higher checks next year. The COLA is typically announced in October and Social Security recipients will receive their adjusted benefits beginning January 2022.