Personal Finance

Social Security cost-of-living adjustment could be 6.2% in 2022

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New Consumer Price Index data points to a possible 6.2% cost-of-living adjustment for Social Security recipients for 2022, according to the latest estimate from the Senior Citizens League.

That’s up from a 6.1% estimate the nonpartisan senior advocacy group projected last month.

Social Security’s annual cost-of-living adjustment is calculated each year based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.

The official calculation, which is typically released by the Social Security Administration in October, is based on the average of July, August and September data.

“With one third of the data needed to calculate the COLA already in, it increasingly appears that the COLA for 2022 will be the highest paid since 1983 when it was 7.4%,” said Mary Johnson, Social Security policy analyst at the Senior Citizens League.

In 2021, the Social Security cost-of-living adjustment was 1.3%. For the average retirement benefit, that amounted to $20 more per month for a total of $1,543.

Still, a more generous 6.2% raise for next year may not exactly be cause for celebration. The reason: rising inflation, which is pushing prices higher.

More from Personal Finance:
Where the push to bring SSI benefits up to federal poverty level stands
How the outlook for Social Security benefits changed amid the pandemic
Inflation concerns have many retirees worried about running out of money

Gasoline, for example, has risen 41.8% over the past 12 months, and is helping to push the COLA estimate up, according to the Senior Citizens League.

The broader Consumer Price Index rose 5.4% in July, driven mostly by rising food and energy prices, according to data released by the Bureau of Labor Statistics on Wednesday.

This is a developing story. Please check back for updates.

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