Christmas Comes Late: Feds Announce Increase for Social Security Benefits

If you have shopped for anything in the last few months, whether it be a turkey sandwich or gasoline, you probably have noticed that prices have gone up. Way up. On some products, such as gasoline and used cars, prices have gone up dramatically. 

And while inflation may make purchasing everyday goods more difficult, the federal government is bringing Social Security and Social Security Insurance (SSI) recipients some cheerful holiday news with the announcement of an upcoming cost of living (COLA) adjustment in advance of the new year.

Where Inflation is Hitting the Hardest

First of all, every city and state is affected differently by the current inflation and shipping crises – you might see the price of meat rise substantially, while your family on the other side of the country sees only a slight increase. And depending on your diet or transportation, your budget may be dramatically affected by the price swings of the past year. 

According to MSN’s analysis of the Department of Labor Data, the price of groceries rose 5.4% over the past 12 months only, yet meats, poultry, fish, and eggs rose 11.9%, beef alone is up 20.1% and pork rose by 14.1% on the wider markets. Gasoline is up 49.6% and used cars are up 26.4%. If you’re a stay-at-home or public transportation riding vegetarian, you may see less impact than your average pickup-driving, burger-eating American, in other words. But overall, the country has experienced a rise of 6.4% over the past year for consumer prices once you factor in most goods and resources needed by Americans.

What is a Cost of Living Adjustment (COLA)?

If you are new to receiving benefits, you may be surprised to know that by law, the federal government adjusts your benefits every year to compensate for the ever-increasing cost of everything around you. So, while the price of turkey sandwiches has gone up, the idea is that your benefits will increase to compensate for this.

We won’t bore you too much by going into the fine details of how these increases are calculated. Suffice it to say that the Social Security Act specifies a formula for determining each COLA. According to the formula, COLAs are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). In plain English, that simply means that a boring bureaucracy in the federal government calculates how much prices are going up and they use that information to calculate how much benefits should increase.

Enough Already, How Much Am I Getting?

The latest Cost of Living Adjustment (COLA) is 5.9 percent for Social Security benefits and SSI payments. 

When Will I Get This Handy Raise?

If you are hoping for some Black Friday cash or an increase in benefits in time for Christmas Day, unfortunately, that may not happen. But it does sound like the increase will arrive in time for the new year, at least for SSI recipients.

Per the SSA website, Social Security benefits will increase by 5.9 percent beginning with the December 2021 benefits, which are payable in January 2022. Federal SSI payment levels will also increase by 5.9 percent effective for payments made for January 2022. Because the normal SSI payment date is the first of the month and January 1 is a holiday, the SSI payments for January are always made at the end of the previous December.

Five Percent, That’s It?

You ain’t wrong. The corner store doubled the price of their grilled cheese sandwiches and cheeseburgers. Gas is over five dollars per gallon in some areas. 5.9% barely seems like it would cover an extra gallon of milk, let alone the ever-increasing prices of everything in this country because of the pandemic, shipping delays, and constant printing of money to keep the economy afloat while we all wait for the day where life entirely returns to normal.

According to the number crunchers, that 5.9% represents the overall increase in consumer prices. But as we noted, some items (gasoline, beef, and pork) are way more expensive now than last year.

In all seriousness though, if you are struggling to make ends meet, there are organizations such as food banks and Meals on Wheels that may be able to help. In addition, check out our article on working part-time while on Social Security benefits to see if you can supplement your income with a side hustle without affecting your benefits.