Why Are Retirees’ Social Security Checks Getting The Biggest Increase In Four Decades?
Following the announcement by the Social Security Administration (SSA) on Wednesday that the amount will be boosted by 5.9% in 2022, retirees will soon experience the highest boost in their Social Security checks in almost four decades. An estimated 70 million Americans would be affected by the decision.
Cost of living adjustments (COLA) are made to Social Security cheques on a monthly basis to guarantee that retirees can meet their basic necessities. According to the Social Security Administration, the enhanced checks will begin arriving in December for nearly 8 million Americans. By January 2022, another 60 million Americans will have received the same payments.
COLA has been stuck at a 1.65% average growth rate for the last ten years, but this current increase can be related to fears about growing inflation. The Federal Reserve and the White House believe that inflation is likely to be temporary, and that it will subside once supply chain bottlenecks are alleviated.
Prices for basic necessities such as food and petrol, on the other hand, have continued to rise, prompting fears that Social Security benefits will lag behind inflation. According to the Social Security Administration, nine out of ten people aged 65 and up receive Social Security benefits, which can account for up to 30 percent of their income. 8.1 million disabled Americans rely on Social Security income in addition to retirees.
Congress may take action if the amount provided is changed. According to the Associated Press, Rep. John Larson, chairman of a House of Representatives Social Security subcommittee, plans to file a new bill that would change the COLA formula to give more weight to health-care costs and other items that disproportionately affect the elderly. In order to cover the costs, his draft proposes an increase in payroll taxes.
Larson has been a vocal supporter of congressional action to strengthen Social Security payments for individuals who rely on them. Larson issued a statement after the latest COLA adjustment was published, saying that the rise only emphasizes the need for a longer-term solution to secure these payments.
The last time Congress changed SSA benefits was more than 40 years ago, he said, adding that COLA changes are insufficient to account for rising inflation and pay basic needs for seniors. He committed to draft a new measure to improve and expand Social Security benefits for this purpose. The Washington Newsday Brief News is a daily newspaper published in Washington, D.C.