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Social Security COLA Updates For 2022

Social Security

Social security retirement benefits, social security disability benefits (SSDI), and SSI (Supplemental Security Income) are the major welfare programs offered by the Social Security Administration (SSA) to eligible Americans. Disability benefits and SSI benefits require a detailed medical chart review to determine eligibility, which ensures that only deserving applicants receive this valuable coverage. While ensuring due benefits are paid to eligible applicants, the SSA also makes regular cost-of-living adjustment or COLA to counteract the effects of inflation. Typically, this adjustment is equal to the percentage increase in the CPI-W or Consumer Price Index for Urban Wage Earners and Clerical Workers for a specific period. During the fiscal year, the increase in prices for goods and services is tracked and this data is used to calculate the following year’s COLA.

In 2022, beneficiaries could receive what is considered the biggest COLA adjustment since the 1980s due to the recent inflation triggered by the coronavirus pandemic. The actual COLA will depend on the changes in prices between July 2021 and the end of September 2021. Usually, the SSA announces the COLA adjustment, if any, in the month of October. The increase in benefits would go into effect in January 2022. SSDI and SSI beneficiaries would also receive this COLA increase.

The new consumer price index data estimates a possible 6.2% COLA adjustment for Social Security recipients for the year 2022. Economist Bill McBride estimates the 2022 COLA raise could be 5.8%; The Senior Citizens League puts it at 6 to 6.2%; Moody’s Analytics estimates it to be 5.6%; and Stephen Goss, the SSA’s chief actuary says the COLA will be close to 6%.

social security graph
(Source: https://www.cnbc.com/2021/08/11/social-security-cost-of-living-adjustment-could-be-over-6-percent-in-2022.html)

Now, around one-third of the data required to calculate the COLA is available, and as Mary Johnson, Social Security policy analyst at The Senior Citizens League points out, it increasingly appears that the 2022 COLA will be the highest paid since 1983 when it was 7.4%.

As a medical peer review company assisting disability attorneys, we understand that in the year 2021, the average SSDI recipient received $1,277 in monthly benefits. Typically, the benefit amounts ranged from $800 to $1,700. For 2021, the maximum SSDI monthly benefit was $3,148. Experts estimate that the 2022 social security disability benefit amount could be $1,345, and the maximum SSDI benefit amount for 2022 would be in the region of $3,315. Though no clear figures can be stated until October, experts say that it is very likely that there will be a significant benefit increase for disability recipients in 2022.

Increases in COLA are automatic. A COLA increase occurs simultaneously with sufficient increase in the CPI-W. One doesn’t have to apply for the COLA increase. SSDI benefit recipients will start receiving the increased benefit from January 2022, whereas SSI recipients will receive their first increased payment on December 31, 2021.

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