The annual cost-of-living adjustment, or COLA, for Social Security benefits in 2022 — usually announced in October — could be 6.1%, the highest since 1983, based on Tuesday's Consumer Price Index announcement, according to Social Security and Medicare policy analyst Mary Johnson of the Senior Citizens League, which estimated the 2022 COLA at 5.3% a month ago.
"This is the highest COLA I've ever estimated in my 26-plus years of researching the annual inflation adjustment," Johnson told ThinkAdvisor.
The consumer price index for all urban consumers in June rose 5.4% over the past 12 months, the Labor Department reported. From May, the CPI grew 0.9% — the largest 1-month change since June 2008, when the index rose 1.0%, according to the Bureau of Labor Statistics. This represents the second-largest advance in over a decade. (The CPI includes food and energy.)
Economists polled by The Wall Street Journal had forecast a 0.5% month-over-month increase.
June's core CPI, which excludes food and energy, rose by 0.9% from May and 4.5% from a year ago, according to the BLS.
'Soaring Inflation'
"While the [COLA] adjustment is high and will come as a welcome boost, retirees are trying to cope with soaring inflation right now with only a 1.3% boost to their benefit this year," Johnson explained.
"This big increase in inflation is deeply eroding the buying power of Social Security benefits, and the majority of retirees depend on Social Security benefits for most of their income," she added.
