On October 13, 2021, the Social Security Administration (SSA) officially announced that Social Security recipients will receive a 5.9 percent cost-of-living adjustment (COLA) for 2022, the largest increase in four decades. This adjustment will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2022. Additionally, increased payments to more than 8 million Supplemental Security Income (SSI) beneficiaries will begin on December 31, 2021.1
Biggest COLA Increase in Decades?
While many predicted a bump of as much as 6.1% given recent movement in the Consumer Price Index (CPI), the announced 5.9% increase is still substantial. Some fear that rising consumer prices may dilute the impact of the increase with inflation currently running at more than 5 percent. While this remains to be seen, Social Security beneficiaries will no doubt welcome the largest adjustment in many years.1
COLA and Nebraskans Delaying Social Security Benefits
Many Nebraska retirees elect to delay their Social Security benefit until the benefit is maximized at Age 70. This preserves the flexibility in how a retiree chooses to cover their retirement expenses, which is important for tax planning in early retirement. Waiting is also like starting a race late but with faster shoes and longer legs. Eventually the late-starter's speed allows them to catch and pass the runners who started the race early, which turns into a bigger lifetime benefit the longer one lives. The good news is the COLA increases apply to all beneficiaries regardless of when they elect to receive their benefit! In other words, delaying preserves all the flexibility of retirement income planning without losing out on cost of living adjustments.
How You Will Be Notified
According to the Social Security Administration, Social Security and SSI beneficiaries are usually notified about their new benefit amount by mail starting in early December. However, if you’ve set up your SSA online account, you will also be able to view your COLA notice online through your “My Social Security” account.1
This content is developed from sources believed to be providing accurate information, and was adapted from content provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.