About seventy million Americans who depend on Social Security benefits got what they desperately wanted this week, as it was announced that there would be a cost of living adjustment (COLA) of 5.9 % for 2022.
This massive increase, the largest increase in nearly forty years, is expected to increase monthly retiree payments from about $ 90 to an estimated average of $ 1,657. Benefits for a typical couple will climb from $ 154 to $ 2,754 per month.
Last year, the COLA only hit 1.3%, which only gave an average boost of $ 20 to monthly Social Security checks.
“The guaranteed benefits provided by Social Security and the increase in COLA are more critical than ever as millions of Americans continue to face the health and economic impacts of the pandemic,” said the CEO of AARP, Jo Ann Jenkins, in a statement.
“Social Security is the largest source of retirement income for most Americans and provides almost all income (90 percent or more) to one in four seniors,” she added.
Social security dry
However, in the midst of this great news for Social Security recipients, another pressing issue is making headlines again: The COLA boost could finally drain Social Security funds a year earlier than expected.
“Social Security is already on the path to insolvency and we believe the higher cost of living payments could deplete the program’s trust fund a year earlier than expected,” the Committee for Federal Budget noted. responsible in a press release.
A recent report released by the US Treasury Department said the Old-Age and Survivors trust fund will only be able to pay expected Social Security benefits until 2033, while Medicare’s hospital insurance fund is expected to grow. dry up in 2026.
The Treasury Department said in a statement that “the finances of both programs have been significantly affected by the pandemic and recession of 2020.”
Eroded purchasing power
However, the meager annual increases in social security over the past decades have done little to keep pace with rapidly rising costs of goods and services. In fact, according to the Senior Citizens League, since 2000, social security benefits have lost around 30% of their purchasing power due to adjustments that have vastly underestimated inflation and rising health care costs. health.
“Over the past 21 years, COLAs have increased social security benefits by 55%, but housing costs have increased by almost 118% and health care costs have increased by 145% over the same period. period, ”Mary Johnson, Social Security and Medicare Policy Analyst for the Senior Citizens League. , Recount FOX Company.
“Worse yet, it seems that inflation is not done with us yet, and the purchasing power of social security benefits may continue to erode in 2022,” she continued.
Ethen Kim Lieser is a Washington state-based science and technology writer who has held positions at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow him or contact him on LinkedIn.
Image: Reuters.
