Social Security Announces Significant Cost of Living Increase for 2022 by Adam Cohen, CPA
Posted on December 14, 2021
by
Adam Cohen
Recipients of Social Security benefits, including Supplemental Security Income (SSI), are getting a 5.9 percent increase in benefits for 2022, marking the largest cost of living adjustment (COLA) in 39 years for the nation’s retirees and special needs children and adults. This 2022 raise also breaks a decade of meager COLA increases that averaged 1.6 percent per year.
Beginning January 1, 2022, more than 64 million retirees will begin receiving $1,657 in Social Security benefits per month, an increase of $92 from the amount they received each month in 2021. The increase for aged couples with both spouses receiving benefits amounts to an additional $154 per month. For general disability claimants, monthly benefits will increase to $1,358 on Dec. 31, 2021, a $76 per month raise from last year. Beneficiaries should note, however, that these amounts do not account for rising Medicare Part B premium payments, which are deducted automatically from their Social Security payments.
Although the Social Security Act ties the annual COLA to the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statistics, it currently does not keep up with rising inflation, which has increased more than 6 percent from October 2020 to 2021. Consequently, individuals at all income levels should recognize that Social Security benefits alone are not enough to finance a comfortable retirement or the perpetual care of family members with disabilities or special needs. Depending on your unique circumstances, you should consider other strategies to secure your financial future and that of your loved ones.
For example, planning for retirement should involve the use of tax-advantaged 401(k) plans, individual retirement accounts (IRA), and/or insurance policies that also provide financial benefits to your surviving family members. If you have a child with a disability, you should consider the use of special-needs trusts to not only maintain that child’s eligibility for Social Security and Medicaid benefits, but to also preserve those assets in order to provide ongoing care and support the quality of life of your beneficiaries.
About the Author: Adam Cohen, CPA, is an associate director of Tax Services with Berkowitz Pollack Brant Advisors + CPAs, where he works with closely held businesses and non-profit charities, hospitals and family foundations to maintain tax efficiency and comply with federal and state regulations. He can be reached at the CPA firm’s Ft. Lauderdale, Fla., office at (954) 712-7000 or info@bpbcpa.com.
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