Updated Exclusive Social Security Benefits Forecast: COLA Likely to Jump to 4.5% in 2022
This would be the largest cost-of-living adjustment for Social Security benefits since 2008.
After several years of tepid cost-of-living increases, seniors are likely to get a significant raise in their Social Security benefits in 2022.
The Kiplinger Letter is forecasting that the annual cost-of-living adjustment for Social Security benefits for 2022 will be 4.5%, the biggest jump since 2008, when benefits rose 5.8%. That would also be higher than the 3% adjustment The Kiplinger Letter predicted earlier this year.
Meanwhile, the Senior Citizens League, an advocacy group, projects that the annual cost-of-living adjustment for 2022 will be 4.7%, although it notes that the inflation rate has been volatile and could change before the final adjustment in October.
The projected increase reflects the rebound of consumer prices that were depressed during the pandemic. Gasoline prices have been rising steadily since the beginning of the year and are expected to keep going up as summer travel increases. Other consumer prices are also expected to rise as the economy continues to reopen. In addition, the latest round of $1,400 stimulus checks will increase demand for cars and other consumer goods.
COLAs are calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers. If prices don’t increase or fall, the COLA is zero. That happened in 2010 and 2011, as the economy struggled to recover from the Great Recession, and again in 2016, when plummeting oil prices wiped out the COLA for that year. In 2020, the COLA increased payouts by 1.3%.