Seniors got a bit of good news over the last few months of 2021. The COLA (cost-of-living-adjustment) for 2022 will result in a 5.9 percent increase in Social Security benefits. This is undoubtedly good news, as more money coming month to month will certainly make life easier.
With that said, however, is this COLA increase enough to stand up against the other changes headed our way in 2022?
As reported by The Motley Fool’s Christy Bieber, there are two changes in 2022 that retired seniors need to see coming. Those changes are an increase in Medicare Premium costs and increased inflation. The effects of these changes to our economy and our healthcare costs can render our benefit increase mute. Medicare Part B Premiums costs will increase by 14.5 percent, creating an average monthly cost of $170. Depending on your monthly amount, this COLA increase may not go as far as it would initially seem.
In addition, a year-by-year comparison of the Consumer Price Index for All Urban Consumers (CPI-U) predicts a 6.2 percent increase in inflation. This is hard news for everyone, but especially retired seniors on a fixed income.
This isn’t the only change coming in 2022, but it is a significant change we need to prepare for. If you’re filing for Social Security in 2022, it’s important to understand how these new costs affect your income and how to plan around them. When budgeting your retirement, understanding how to calculate your COLA increase can give you an idea of how far your benefits will go, when you add up the new value and subtract the new costs. That way, even in the face of change, you can remain in control of your retirement.