WASHINGTON – Rising inflation is expected to lead to a sizeable increase in Social Security’s annual cost-of-living adjustment, or COLA, for 2022. Exactly how much will be revealed Wednesday morning after a Labor Department report on inflation during September, a data point used in the final calculation.
Over the last 10 years, the Social Security COLA has averaged about 1.7% annually as inflation remained low. But the economic recovery from the coronavirus pandemic has triggered rising prices for a wide range of goods and services, and that’s expected to translate to bigger checks for retirees.
WHY ARE SOCIAL SECURITY BENEFITS ADJUSTED?
Policymakers say the COLA works to preserve the purchasing power of Social Security benefits, and shouldn’t be seen as a pay hike for retirees.
At one time Congress had to approve inflation increases, but starting in the mid-1970s lawmakers turned that function over to nonpartisan experts within the government bureaucracy. The annual review is now tied to changes in an official measure of inflation and proceeds automatically and with no political brinksmanship.