Social Security will see a 5.9% cost-of-living increase in 2022 for the nearly 70 million Social Security and Supplemental Security Income beneficiaries, the Social Security Administration announced. For an average retiree who receives monthly social security benefits, that adds up to an additional $92 a month.
It’s the largest increase in 40 years.
See our COLA increase watch for more on the COLA and Social Security increases. The Social Security Administration usually announces the COLA increase for the next year in October.
#BreakingNews – The 2022 COLA is 5.9%. Stay tuned for more information.
— SocialSecurity_Press (@SSAPress) October 13, 2021
2022 Social Security and SSDI Effective & Payment Dates:
- Social Security benefits are effective beginning with December benefits, which are payable in January.
- Federal SSI payment levels will begin on Dec. 31, 2021.
2022 Social Security Changes
The maximum amount of earnings subject to the Social Security tax (taxable maximum) increased for 2022 to $147,000 from $142,800, a 5.9% increase.
The earnings limit for workers who are younger than “full” retirement age (see Full Retirement Age Chart) increases to $19,650 in 2022. The SSA deducts $1 from benefits for each $2 earned more than $19,650.
The earnings limit for people reaching their “full” retirement age in 2021 increased to $51,960. The SSA deducts $1 from benefits for each $3 earned more than $51,960 until the month the worker turns “full” retirement age.
|Substantial Gainful Activity (SGA)|
|Trial Work Period (TWP)||$ 940/mo.||$ 970/mo.|
|SSI Federal Payment Standard|
|Individual||$ 794/mo.||$ 841/mo.|
|SSI Resource Limits|
|SSI Student Exclusion|
|All Retired Workers||$1,543||$1,657|
|Aged Couple, Both Receiving Benefits||$2,596||$2,753|
|Widowed Mother and Two Children||$3,001||$3,187|
|Aged Widow(er) Alone||$1,453||$1,553|
|Disabled Worker, Spouse and One or More Children||$2,224||$2,383|
|All Disabled Workers||$1,277||$1,358|
How Social Security is Calculated
Social Security benefits are based on lifetime earnings and are adjusted or “indexed” to actual earnings to account for changes in average wages since the year the earnings were received. Then, Social Security calculates the average indexed monthly earnings during the 35 years in which the most was earned. They apply a formula to these earnings and arrive at your basic benefit, or “primary insurance amount.” This is how much would be received at your full retirement age — 65 or older, depending on the date of birth.
How Are Social Security Increases Calculated?
To ensure the value of money at retirement keeps up with the rate of inflation, the SSA ties its adjustment for Social Security benefits to the wage earners’ Consumer Price Index (CPI-W). The increase is known as a Cost-of-Living Adjustment (COLA) and it calculates the change in the CPI-W for urban wage earners and clerical workers from the third-quarter average of the previous year to the third-quarter average for the current year
|Third quarter total||754.999||808.157|
|Average (rounded to the nearest 0.001)||253.412||269.386|
|Inflation According to the CPI-W||1.3%||5.9%|
Third-quarter 2020 was used for the three-month average comparison, as the law dictates that the SSA use the same three months of “the last year in which COLA became effective.”
|History of COLA (cost-of-adjustments) since 1975|
|Money & Finance||Cost of Living Adjustment|
|VA Disability Rates||States That Don’t Tax Social Security|