Social Security Checks Will Do Something This Month They Haven’t Done in 40 Years. Latest News
A phenomenon that hasn’t occurred in Social Security retirees for more than four decades is taking place in January of 2022. Everyone over the age of 65 who receives income from the well-known benefits programme will be affected by this change to their paychecks.
While it may appear to be a positive development at first glance, the reality is that Social Security is reaching a major milestone for the first time in decades, which is not beneficial to retirees. As of January 2022, the following changes will be made to retirement benefits.
A person is looking at a laptop and some financial documents.
This significant shift in benefits is unprecedented in recent history.
So, what is the significant change that is taking place in Social Security benefits this month that hasn’t happened in a long time? Benefit checks are increasing at a rate that is greater than 5.8 percent per year. Specific Social Security benefits will increase by 5.9 percent in 2022 when compared to the amount retirees received in 2021, according to the Social Security Administration.
It has been a very long time since there has been an increase in benefits that exceeds 5.8 percent. It was 1982 when the annual cost-of-living adjustment (COLA) was 7.4 percent, which was the last time seniors received a larger pay raise.
According to the data , the largest increase in benefits since that time was 5.8 percent, and that increase occurred in January of that year. Compared to previous decades, annual raises for retirees have been significantly lower, with retirees receiving no additional money in three out of the last thirteen years (see chart).
Isn’t it great to hear that the largest benefit increase in decades has occurred?
A Social Security increase that is more significant than any that retirees have seen in decades appears to be welcome news. Nevertheless, cost of living adjustments that result in benefit increases are not comparable to traditional merit-based raises that employers may award to their employees.
Instead, COLAs are calculated using a predetermined formula that is intended to help retirees maintain their purchasing power. When a comparison of the costs of goods and services shows that prices are increasing year over year, retirees are entitled to a cost-of-living adjustment.
The only reason retirees are receiving such a significant benefit increase is because inflation is on the rise, according to recent data. In addition, inflation is detrimental to retirees.
When prices rise, seniors’ purchasing power decreases as a result of their savings not being able to stretch as far. Savings, along with Social Security, is one of the two most important sources of income for elderly Americans.
If you’re retired and taking a set amount of money out of your retirement account each month, and that money doesn’t buy as much as it did in the past, you’ll find yourself in a worse financial situation.
The large Social Security increase may give the impression that it is helping to offset the damage that inflation is doing to the value of retirees’ savings. After all, they’ll be receiving larger pension payments in retirement.
The only problem with that is that a COLA will only be able to help a retiree keep up with cost increases to a certain extent. Because the COLA calculation is based on changes in the consumer price index, it should not have an impact on purchasing power.
That is, of course, the best-case scenario. If inflation rises faster than the cost-of-living adjustment (COLA) because the consumer price index used to measure rising prices does not accurately reflect senior spending, even a large raise may not be enough to keep up with rising costs.
If inflation soars after the annual COLA is calculated, the increase will be insufficient to allow retirees to cope with the increased cost of living expenses.
The likelihood that both of these events will take place in 2022 is high, according to the evidence. As a result, even after the largest increase in Social Security benefits in four decades is applied to those benefits, those benefits will not be as generous.
Consumer price indexes have revealed that inflation is higher than it has been in decades, giving retirees good reason to be concerned about their financial security. While they may be delighted to see a significant increase in their Social Security benefits, they may still find themselves needing to tighten their belts, despite the fact that they will be receiving more money.
Most retirees are completely unaware of the $17,166 Social Security bonus they are entitled to.
When it comes to retirement savings, if you’re like the majority of Americans, you’re a few years (or more) behind. However, a few little-known “Social Security secrets” may be able to assist you in ensuring a boost in your retirement income.
Example: one simple trick could net you an extra $17,166 per year if you do it consistently enough. We believe that if you learn how to maximize your Social Security benefits, you will be able to retire confidently and with the peace of mind that we all seek.