The United States Social Security Administration has announced that there will be an increase in the Social Security and Supplemental Security Income (SSI) in 2022. The increase is the largest increase since Ronald Raegan’s administration in the 1980s. Approximately 70 million Americans are set to benefit from this increase that will begin in January of next year.
The Social Security Administration makes adjustments to the payments it makes to Americans receiving these benefits on a yearly basis. However, recipients do not see a significant bump in payments.
The SCA announced that it was going to raise Social Security payments by 5.9 percent. An adjustment is made according to the cost-of-living adjustment (COLA). The last time there was a significant adjustment to the payments was in 1984, when the Social Security Administration adjusted Social Security benefits by 7.4 percent.
The 1980s saw some of the highest inflation rates in U.S. history, reaching as high as 14 percent. As such, the Social Security adjustments were on the high side. Since then, adjustments have trended at an average of 2 percent. Social Security adjustments for 2020 and 2021 were 1.6 percent and 1.3 percent respectively.
In its press release, the Social Security Administration noted that the adjustment will also affect the maximum taxable income. The maximum amount of an individual’s earnings subject to Social Security tax will move up to $147,000 from its previous $142,800.
Adjusted payments will be rolled out to the approximate 8 million Americans currently receiving SSI benefits on December 30, 2021. Then from January, beneficiaries of Social Security will begin receiving the adjusted payments with the 5.9 percent increase.
Social Security Adjusts To Inflation Rates
The adjustment in Social Security benefits is in response to the rising inflation rates in the country. Due to the Fed printing dollars, the inflation rate has gone up in the past few months and it is not expected to fall below 4 percent until the second quarter of 2022.
Wealthier Today reported that inflation rates had grown above 5 percent, causing prices to surge 5.4 percent on a year-over-year basis. This has led to more spending in American households on necessities like food, housing, and gas.
Food prices are up a reported 0.9 percent this month and housing concerns are on the rise as some parts of the U.S. have seen rent go up as high as 24 percent following the pandemic.
Keeping these in mind, the Social Security adjustment is to help the approximately 70 million Americans living on benefits to keep up with the rising rates. If inflation rates keep up with current trends in 2022, then there might be a higher revision to offset the effect of inflation.