The boost in benefits for people living off Social Security is to offer some compensate for the high inflation rate we are experencing as the economy struggles to recover from the pandemic.
Social Security and Supplemental Security Income benefits for roughly 70 million Americans will increase 5.9% in 2022, the Social Security Administration announced on Wednesday, as inflation is the highest ever in 13 years.
Also on Wednesday, the Labor Department said consumer prices rose 5.4% during the 12 months ending in September.
The boost in benefits for people living off Social Security is to offer some compensation for the high inflation rate we are experiencing as the economy struggles to recover from the pandemic, according to NPR's Chief Economics Correspondent Scott Horsley.
One reason for the consumer price increase is the oil prices worldwide.
"Oil prices have been on a tear lately," Horsley said. "The U.S. benchmark topped $80 a barrel this week for the first time in nearly seven years. That price has more than doubled over the last year. And gas prices, which typically fall in the autumn as summer driving season winds down, are instead going up. Gas was one of the big drivers of inflation in September. Prices were up 1.2% from the month before and a whopping 42% from a year ago. And what's driving all this, A, is a strong rebound in demand for oil and production that's growing only modestly. You know, OPEC and the Russians are sticking with their plan to increase output only gradually. And domestic producers have also been pretty disciplined about not flooding the market."
Grocery prices were another big driver of inflation last month. September prices were up 4.5% from a year ago, and grocery prices rose more than 1% just in the last month, according to the U.S. Bureau of Labor Statistics.
And, a huge backlog of cargo ships waiting to get into ports in Southern California has helped drive up the costs of goods and services during the pandemic. There's also a shortage of trucks and drivers to transport the goods from ports, per the Associated Press.
The cost of living adjustment of 5.9% for next year is the biggest COLA in decades with benefits payable to more than 64 million Social Security beneficiaries.
The COLA, as it's commonly called, amounts to $92 a month for the average retired worker, according to estimates released Wednesday by the Social Security Administration. That marks an abrupt break from a long lull in inflation that saw cost-of-living adjustments averaging just 1.65% a year over the last 10 years, according to the Associated Press.
With the increase, 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.
Despite this, Treasury Secretary Janet Yellen told CBS News she still thinks this high inflation is a temporary problem.
The pandemic "led to a huge shift in demand away from services and toward goods. And it's created huge bottlenecks in supply chains," Yellen said. "As the economy adjusts and we get the pandemic under control, the global economy comes back, these pressures will mitigate and, I believe, will go back to normal levels."
NOTE: Social Security and SSI beneficiaries are normally notified by mail starting in early December about their new benefit amount. Most people who receive Social Security payments will be able to view their COLA notice online through their personal my Social Security account. People may create or access their my Social Security account online at www.socialsecurity.gov/myaccount.
