MIAMI (CBSMiami/CNN) - The Social Security Administration announced Wednesday that about 70 million US residents, including about 4 million Floridians, eligible to receive benefits, will receive an annual cost of living adjustment of 5.9% next year.
This will be the largest increase since 1982.
The spike will boost retirees' monthly payments by $92 to an estimated average of $1,657 for 2022.
"This would be the highest COLA that most beneficiaries living today have ever seen," said Mary Johnson, Social Security and Medicare policy analyst for The Senior Citizens League.
But that doesn't mean they'll be able to go on a spending spree. The reason for the hike is because inflation is soaring too.
Those eligible receive a cost of living adjustment, or COLA, each year. It's based on a one-year increase in inflation and is designed to help beneficiaries cope when prices rise.
In 2021, the adjustment was 1.3% -- which translated into a roughly $20 a month increase for retired workers. Over the past 12 years, the boost has averaged 1.4%, according to the league.
After decades of inadequate increases, the 2022 boost finally matches beneficiaries' rising costs more closely, said Nancy Altman, president of Social Security Works, an advocacy group.
"But large as it may appear on paper, it is not nearly enough for seniors and people with disabilities on fixed incomes to make ends meet," she said.
Some 40% of beneficiaries depend on the monthly checks for at least 90% of their income, and two-thirds of recipients depend on the payments for at least half of their income.
The annual increase hasn't kept pace with the rising costs of the goods and services that retirees typically use, according to a recent study by The Senior Citizens League. It noted that it has received more than 200 emails over the past month, with many retired and disabled senders saying rising inflation is making it impossible for them to pay their bills.
Social Security benefits have lost 32% of their buying power since 2000, the advocacy group found. The annual adjustments have increased payments by a total of 55%, but seniors' typical expenses have grown nearly 105% over the same period.
The soaring cost of gas, used vehicles, home heating oil, bacon, eggs, beef, milk and home care for the elderly were among the fastest-growing expenses for older Americans over the year ending July 2021, the league found.
The national average price for gasoline hit $3.27 a gallon on Monday, according to AAA. That's the highest in seven years and near double the price in April 2020.
Housing costs rose nearly 118% and health care costs increased 145% since 2000, said Johnson. These two categories are not adequately accounted for in the annual adjustment, she said.
Social Security's cost of living adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as CPI-W. It is slightly different than the broader and better known Consumer Price Index for all Urban Consumers.
Medicare Part B premiums, which are typically deducted from Social Security checks, are also expected to increase significantly next year. Medicare's trustees estimated in August that the standard monthly premium will jump about 6.7% for 2022.
Social Security's finances remain on shaky ground. The trust fund that pays benefits to retirees and their survivors will be depleted by 2033 and only able to distribute roughly three-quarters of promised payments unless Congress addresses the program's long-term funding shortfall, according to the most recent Social Security trustees' report.
That's one year earlier than reported in 2020 due to the pandemic, which reduced the number of workers paying Social Security tax. But Covid-19's long-term effects on the trust funds remain unclear.
The maximum earnings subject to the tax will rise to $147,000 for 2022, up from $142,800 this year.
(©2021 CBS Broadcasting Inc. All Rights Reserved. Cable News Network, Inc., a Time Warner Company, contributed to this report.)
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