After the Social Security Administration announced a record-high cost-of-living adjustment for 2022, many beneficiaries are asking, “How much bigger will my monthly checks be?”
People who receive Social Security or Supplemental Security Income, or SSI, benefits will get a 5.9% boost to their payments next year.
That is that highest increase since 1982. The last time the COLA came close was in 2009, when it was 5.8%.
More than 64 million Social Security beneficiaries are slated to see bigger checks in January. The same also goes for about 8 million SSI recipients.
The annual adjustments are based on inflation. So bigger monthly checks mean that consumer prices have also gone up. Consequently, the extra cash may not go as far.
The average monthly retirement benefit will go up by $92 — to $1,657 in 2022 from $1,565 in 2021.
But the size of the increase will vary by beneficiary.
“Anybody who is currently in receipt of a benefit should take a look at what their benefit is and imagine what a roughly 5.9% increase will do to that benefit level,” Stephen Goss, chief actuary at the Social Administration, said during a recent webinar hosted by the Bipartisan Policy Center.
However, there is one thing that will offset how large those checks will be: Medicare Part B premiums.
Those payments toward Medicare Part B are often deducted directly from beneficiaries’ monthly checks. However, not everyone has Medicare Part B coverage, particularly if they are still covered under an employer health plan or if they have not yet reached Medicare eligibility age, which is 65.
The standard Medicare Part B premium is projected to be $158.50 per month, up from $148.50 this year. However, the rates for next year have not been officially announced.
If you are not covered by Medicare Part B, you can multiply your monthly benefit amount by 1.059 to approximate your payment for next year, said Joe Elsasser, founder and president of Covisum, a Social Security claiming software company.
If you are covered by Medicare Part B, subtracting $10 from that calculation could bring you pretty close to what your monthly payment for 2022 could be, Elsasser said.
However, there is one caveat. People with incomes above certain levels will pay more for Medicare Part B coverage. This is known as the Income-Related Monthly Adjustment Amount, or IRMAA.
A new table for Medicare Part B premiums for 2022 has also not yet been released. However, this year’s IRMAA rates will likely be reasonably close, Elsasser said.
Both Social Security and SSI beneficiaries will be notified by mail in December as to what their benefit payments will be next year. That information will also be available online through personal My Social Security accounts.
New benefit amounts for 2022 will not be calculated for those covered by Medicare until after the premiums for next year are announced. Medicare changes for 2022 will be available at Medicare.gov.