Social Security to Get Biggest Raise in Over a Decade, Don’t Get Excited Yet

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Social Security is about to get a cost-of-living adjustment, but while that might sound like good news on the surface, don’t get too excited yet. It’s possible that a bigger check may not bring bigger benefits. Here’s why…

Social Security to get biggest raise in over 10 years–but there’s a downside

Periodically, the government issues a raise for Social Security benefits. These are called cost-of-living adjustments (COLAs). These adjustments are built into the program for the purpose of helping to ensure that Social Security benefits don’t lose buying power due to inflation and/or rising prices.

The cost-of-living adjustments for Social Security will be applied in 2022. It will be the largest raise the federal government has allotted to beneficiaries since 2009. While, on the surface, it sounds like something great for Social Security recipients, it’s not all it appears to be. In the end, even though seniors will have a bigger benefit check, they may not end up being financially better off as a result. Here’s why…

Why a bigger Social Security check may not be a bigger bonus

The biggest reason seniors may not be better off with a bigger Social Security check is right there in the name of the reason they are getting paid a little more money: Cost-of-living adjustment (COLA).

The cost of living is going up. So while you are receiving more, at the same time, you’re paying more for things. Therefore, you’re not getting ahead – you’re just keeping up. And here’s where the really bad news comes in…You may not be keeping up.

The really bad news for seniors…

This will hardly be news to anyone who’s been to the grocery store or gas station. Prices are soaring.

When the federal government decides to give COLAs it bases how much it increases benefits based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

What the Fed does, for example, is to look at the (CPI-W) for the months of July, August, and September. Then, that average is compared to those same months for the prior year to determine how large of a cost-of-living increase to apply to Social Security.

While the numbers are in, the CPI increase over the past twelve months is somewhere around 5 percent, according to the Motley Fool. The investing site says that, based on the level of inflation, they project that the 2022 increase will be around 4 percent.

The math is easy. Seniors may get a 4% increase, but with the CPI at 5%, they will be coming up short by 1%. Bigger check, but still behind.

Where seniors may get hit the hardest

Most importantly for seniors, it’s not solely that prices are rising that is a problem. The critical factor is where prices are increasing the most. As it turns out, it’s on items that will affect seniors more.

For starters, Medicare premiums are rising. The cost of healthcare and housing have risen and these are two areas that significantly affect seniors.

Another problem is that CPI-W is a poor barometer for seniors. Remember, it’s called the “Consumer Price Index for Urban Wage Earners and Clerical Workers.” Seniors are retired. It’s not a good match.

According to the Motley Fool, since 2000, seniors have lost roughly 30% of their buying power.


Without a raise in Social Security benefits, seniors will be in difficult straits against a tide of inflation. So a cost-of-living adjustment is a good thing. However, despite the good intentions of the government to increase Social Security benefits, the amount they are raising benefits by falls short and is lower than the percentage by which inflation is actually affecting prices for seniors. As a result, instead of helping seniors stay even with skyrocketing prices, retirees will still find themselves coming up short – even with a raise in benefits.