BIG COST OF LIVING ADJUSTMENT BY SOCIAL SECURITY
On October 13, 2021, the Social Security Administration announced a 5.9 Percent Cost of Living Adjustment (COLA). This is the largest COLA in forty years! Increases in recent years have ranged from zero (in 2015) to 2.8% (2018).
Why is the COLA so large this year? The Social Security Act provides that the annual COLA is tied to the increase in the Consumer Price Index (CPI). CPI is an economic indicator determined by the Department of Labor’s Bureau of Labor Statistics. As the CPI rises, the COLA rises to help people living on a fixed income keep pace with their expenses.
When will the COLA kick in? The increase will apply to people receiving Social Security Disability Benefits or Retirement Benefits and goes into effect in January of 2022, which will be a significant increase in payments for many disabled and retired workers.
It is important to know that this COLA applies and is payable even if your benefits are being offset by receipt of workers’ compensation. In addition, people who receive Supplemental Security Benefits (SSI) will also receive an increase in benefits in December, 2021.
If you are currently receiving benefits from Social Security, you should receive a notification of the change of benefits in November. You may also view your increase on your “My social security” account at SSA.GOV (which we wrote about in a previous article).