It’s official, the Social Security Administration released a statement announcing the COLA for 2022. The 5.9% increase will be the largest COLA increase seen in years.
Although this increase seems like it would be great news for seniors, there are some unfortunate realities that are going unrecognized.
Calculating COLA and Decreasing Purchase Power
The annual increases to Social Security beneficiary payments are calculated using third-quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
However, this formula is not designed to help recipients get the full benefits they earned. Rather, by tethering the formula to the CPI-W as the inflationary measure, beneficiaries are receiving an increase in an attempt to keep their payments on par with inflation. Nevertheless, this increase cannot keep up with inflation and rising costs.
Furthermore, it is imperative to understand that these calculations do not include healthcare costs—a mistake that is costing senior citizens.
Increases Consumed
The unfortunate reality is that any increases to benefit payments are not kept in the pockets of senior citizens. More often than not, this additional payment is consumed by the ever-increasing prices of healthcare.
Social Security benefits have seen an average increase of 2.2% from 2000 to 2020. However, this increase was outmatched by Medicare Part B premiums. Medicare premiums saw an increase of 5.9% over the same time period.
This means that any increase provided to senior citizens was immediately consumed by healthcare costs.
We Are Working to Help Senior Citizens
Unfortunately, the COLA increase for 2022 will not be enough, even if it’s the largest COLA increase seen in years. This is especially true if it does not consider healthcare costs in the calculations.
That is why Senior Security Alliance has created The Senior Citizens Bill of Rights. This bill helps guarantee more financial security for senior citizens nationwide. For more information on our bill, be sure to check out our guide on each of the bill’s seven rights.
