If you receive Social Security disability or retirement benefits, you should be aware of cost-of-living adjustments that could be applied to Social Security benefit payments in 2022. Here, we’ll discuss the adjustments made by the SSA and how they could affect you.
What Is the Cost-of-Living Adjustment (COLA)?
The cost-of-living adjustment, or COLA, is a change made to your monthly Social Security benefits to help the money you receive in benefits keep up with the inflation rate and rise in consumer prices. COLAs are expressed as a percentage increase of a Social Security recipient’s benefits. In 1975, Congress mandated that a COLA for Social Security benefits be calculated and applied each year. The Social Security Administration announces the annual COLA each October for the following year.
Cost-of-Living Adjustment Updates for 2022
On October 13, 2021, the Social Security Administration announced that the 2022 COLA increase would be 5.9 percent. This represents the largest COLA since 1983, which saw a COLA of 7.4 percent. The large cost-of-living adjustment for 2022 has been attributed to the significant increase in the price of goods and services during 2021. The increase in consumer prices has largely been driven by factors such as the COVID-19 pandemic, extreme weather, bottlenecks in global supply chains, and rising energy costs.
How Is the Cost-of-Living Adjustment Calculated?
The Social Security Administration calculates the annual COLA based on the change in prices for goods. Specifically, the SSA relies on the Consumer Price Index for Urban Wage Earners and Clerical Workers, also known as the CPI-W, which is calculated by the Bureau of Labor Statistics (BLS). The BLS uses a consumer survey to determine what products and services people regularly buy. These products and services are included in a listing of about 80,000 products and services that make up the CPI-W. The BLS then contacts retailers and service providers to determine the prices of those products. These prices are used to calculate the CPI-W.
COLA Updates Over the Years
Since COLAs became mandatory for Social Security benefits in 1975, the dollar amount of benefits has increased in all but three years – 2010, 2011, and 2016. Typically, COLAs only increased about one to two percent each year, although certain years have seen COLAs of high single-digit or even double-digit percentages.
Before the 2022 COLA increase, the largest COLA increase since the 7.4 percent increase in 1983 was a 5.8 percent increase for 2009. Between 2013 and 2022, COLAs ranged between zero and 2.8 percent, with most years around 1.5 percent.
The first years following the introduction of mandatory COLAs saw some of the largest COLAs, including eight percent for 1976, 9.9 percent for 1980, 14.3 percent for 1981, and 11.2 percent for 1982.
Contact an Experienced Social Security Disability Attorney in Oklahoma City Today
If you have questions about how the cost-of-living adjustment for 2022 might affect your disability benefits, contact Ryan Bisher Ryan Simons today for a free, no-obligation consultation. You’ll be able to talk to an experienced Oklahoma City Social Security disability attorney about your COLA when you reach out to us by phone or online. Since 1984, our attorneys have offered clients the legal expertise and one-on-one attention they deserve when going through the complex process of resolving their legal issues.
We are Ryan Bisher Ryan & Simons, a legal firm that, for decades, has been fighting for the rights of hardworking Oklahoma residents. Our mission is to hold the powerful accountable.
