Social Security checks will increase by 5.9% next year — the biggest increase since 1982.
This Cost-of-Living Allowance (COLA) increase will boost monthly checks for 70 million retirees, survivors, and Americans with Disabilities who have qualified for Social Security Disability benefits.
However, because the COLA increase is being driven by inflation, that means inflation will have all of these people paying more at the grocery store, at gas pumps, and pretty much everywhere else. Due to the effects of the pandemic, most everything is more expensive and the COLA may only be the minimum needed to maintain the purchasing power that you’ve had all along. Additionally, two other items — Medicare Part B premiums and taxes — will likely reduce the value of the COLA increase for many.
Social Security’s cost-of-living adjustment is calculated each year using the Consumer Price Index for Urban Wage Earners and Clerical Workers, also known as the CPI-W.