Social Security recipients still on track for biggest cost-of-living hike in years

A sign for the Social Security Administration is seen

The Social Security Administration's main campus is seen in Woodlawn, Maryland in a file photo.Patrick Semansky | AP Photo

People who receive Social Security payments, including senior citizens and workers with disabilities, are still on track for a major increase in their benefits in 2022.

Beneficiaries could see their payments rise by 6.2% in January, according to a recent estimate from the Senior Citizens League, an advocacy group for seniors. That would be the biggest cost-of-living hike since 1983, when a 7.4% increase took effect.

AARP is projecting a bump of 5.5% to 6%.

The Social Security Administration typically announces its annual cost-of-living increase in October and it then takes effect in January. The hike is based on the average rate of inflation over the prior three months.

All sorts of prices have been on the rise in recent months, which should translate into the larger increase for Social Security recipients. If inflation recedes, the increase could be smaller.

Energy prices in particular have been pushing inflation higher, said Mary Johnson, Social Security and Medicare policy analyst for the Senior Citizens League, according to AARP. The average price for a gallon of unleaded gas, for example, is up over 30% in the last year.

Rising prices are particularly tough on retirees, AARP said. Social Security benefits rise only once a year, but inflation increased 0.5% in July alone.

The 2021 cost-of-living increase for Social Security recipients was just 1.3%, which translated into an average of about $20 a month for individuals, AARP said. A 5% increase for 2022 would raise the average monthly benefit by about $77 and a 6.2% bump would mean an extra $96 a month.

Inflation has been low in recent years, which has meant mostly small cost-of-living bumps for Social Security beneficiaries. Inflation was so low that there was no increase in 2009, 2010 or 2015.

If you purchase a product or register for an account through a link on our site, we may receive compensation. By using this site, you consent to our User Agreement and agree that your clicks, interactions, and personal information may be collected, recorded, and/or stored by us and social media and other third-party partners in accordance with our Privacy Policy.