Senior citizens and workers with disabilities could see the biggest boost to their Social Security benefits in decades thanks to hot inflation, according to Yahoo Money.
Beneficiaries could see benefits rise by 5.8% in January 2022, according to a Bank of America analyst note, Yahoo said.
An advocacy group, the Senior Citizens League, projected an increase of 6.1%, according to CBS News.
That would be the biggest bump since 1983, when an increase of 7.4% took effect, according to CBS. The January 2021 cost-of-living increase was just 1.3%.
The Social Security Administration makes an annual cost-of-living adjustment to benefits once year. The increase gets announced in October and is based on the average rate of inflation over the prior three months, CBS said.
The bump takes effect for benefits that get paid in January.
Prices for everything from gas to groceries have been on the rise lately, which will translate into the larger cost-of-living hike, according to CBS. Inflation could also recede between now and the fall, which would result in a smaller increase.
For many retirees, the 2021 increase translated to just $20 more per month, according to CNBC.
That has left many people who receive Social Security benefits with less buying power as prices have gone up, according to CBS.
A 5.8% jump in January would yield over $80 more a month, according to Yahoo.
Social Security payments had lost buying power even before this year’s higher inflation, according to a report from the Senior Citizens League, CBS said. Benefits lost about one-third of their buying power in the two decades since 2000.
That’s partly because health expenses such as Medicare premiums rose much faster than inflation, according to CBS.
There are some efforts to change how the cost-of-living adjustments are calculated, CBS said. A bill from Democratic U.S. Rep. John Garamendi of California would use a different measure of inflation to calculate the adjustments, with the idea of reflecting seniors’ actual expense more accurately.
Under the bill, the Social Security Administration would be required to use the Consumer Price Index for the Elderly to determine cost-of-living increases. That index rose at an average annual rate of 3.1% from 1982 to 2011, compared with 2.9% for the index that’s used now, CBS said.