Social Security’s Biggest Boost in Decades

Happy humpday! Big news today for Social Security beneficiaries — and it could affect the outlook for the program's trust funds. Here's wha you need to know.

Social Security Benefits Set for Biggest Boost in Decades

Social Security benefits will increase by 5.9% in 2022, the largest increase since 1982, the Social Security Administration announced Wednesday.

“This would be the highest COLA that most beneficiaries living today have ever seen,” Mary Johnson, Social Security and Medicare policy analyst for The Senior Citizens League, told CNN.

The cost-of-living adjustment will affect about 70 million people overall, including 64 million retirees and 8 million Supplemental Security Income recipients. (Some beneficiaries receive payments from both programs.)

The adjustment will boost the average individual retirement payment to $1,657 per month next year, an increase of $92, and to $2,753 per month on average for couples, an increase of $154.

With the annual increase in benefits averaging just 1.65% over the last decade, the latest adjustment is much larger than in recent years. The administration also announced that the maximum amount of earnings subject to the Social Security tax will rise by 2.9% next year, increasing to $147,000 from $142,800.

Inflation surges: While seniors will welcome the boost, the increase in benefits is driven by inflationary pressures that have been larger and lasted longer than many economists predicted in the wake of the coronavirus pandemic.

The Labor Department said Wednesday that the consumer price index rose by 0.4% on a monthly basis in September, and 5.4% on an annual basis. That means that much if not all of the Social Security adjustment will be claimed by higher prices for all kinds of goods, from gasoline to groceries.

The annual increase in benefits is not intended to provide an increase in real purchasing power. Rather, it is designed to maintain purchasing power at a steady level. But some advocates say the government program has failed to do that over the years, in part because of inaccurate inflation measures.

“This is welcome but inadequate — health care and prescription drug costs have been going up way faster than seniors’ cost of living,” Nancy Altman, co-director of the advocacy group Social Security Works, told The Washington Post. “People’s Social Security benefits have been eroding for decades, and will continue to erode even with this increase.”

Raising the long-term cost: Higher benefit payments will put additional pressure on the Social Security trust funds. The Old-Age and Survivors Insurance Trust Fund, which provides benefits for retirees, is currently projected to deplete its reserves in 2034, at which point recipients will see a 22% cut in benefits, assuming Congress doesn’t act before then.

Anqi Chen of Boston College’s Center for Retirement Research told The Wall Street Journal that the latest upward adjustment could move the depletion date forward by about three months, though much depends on how wages keep up with inflation.

“If wages are not increasing at the same rate as inflation in a given year, then what’s going in is going to be increasing less than what’s going out in benefits,” Chen said. “That’s when you get the mismatch.”

Poll of the Day: Most Democrats Want to Go Big on Build Back Better Act

As Democrats continue to debate how much and how to pare back their planned $3.5 trillion bill to expand the social safety net and combat climate change, a new CNN poll finds that 41% of American adults and 75% of Democrats prefer legislation that includes all of the proposed policy changes over a scaled back version that costs less.

Three in 10 respondents, and 20% of Democrats, said they prefer a bill that enacts fewer policy changes and costs less. And 29% of adults overall, including 55% of Republicans, say they prefer Congress not pass any version of the bill.

Among independents, 36% prefer the full bill while 32% want the smaller version and another 32% don’t want the legislation at all, though most independents who lean Democratic say Congress should enact the full package while most of those who lean Republican say Congress should scrap it altogether.

Democrats’ messaging problem: Democrats have struggled to sell the bill to the American public, at least in part because its size and scope have resulted in it being described in terms of its cost rather than its content. A CBS News poll earlier this week found that only 10% of Americans say they know a lot of specifics about the plan, compared to 29% who say they don’t know what’s in it. Asked what they’ve heard about the proposed legislation, nearly 60% in the CBS poll cited the $3.5 trillion price tag and tax increase for high-income individuals while just 40% cited proposals to add dental, vision and hearing coverage to Medicare or lower drug prices in the program.

The new CNN poll adds to those messaging concerns, as it finds that just 25% of respondents say their family would be better off if Congress passed both a bipartisan infrastructure bill and Democrats’ Build Back Better plan. Nearly a third say they would be worse off and 43% say they’d fare about the same.

The CNN poll finds President Joe Biden with 50% approval and 49% disapproval.

The poll, conducted by SSRS from October 7 through October 11, surveyed 1,000 adults and has an overall margin of error of 4.2 percentage points.

Quote of the Day

“This puts [Senate Minority Leader Mitch] McConnell in a box canyon where he has to be tough and fight the debt limit. He lost face during that debate and now he’s going to have to step up and actually be tougher on the second go on the debt limit and force Democrats to use reconciliation.”

– Brian Darling, a GOP strategist and former Senate aide, in a piece at The Hill citing Republicans saying that McConnell’s agreement to raise the debt limit until December has cost him with his own party, meaning that “he doesn’t have any more political capital to spend on helping Democrats raise the debt limit again.”

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