Before taking office, President Joe Biden outlined several changes he wanted to make to Social Security -- many of which would increase retirement benefits. These changes included a higher minimum benefit, boosted survivor benefits, and a raise for some of America's oldest retirees.
Since Biden took office, though, modifications to the retirement benefits program haven't been a priority, as the Administration has focused on coronavirus relief, infrastructure, and shoring up voting rights. As a result, there's currently no pending legislation that would result in higher benefits for seniors.
That's the bad news for those hoping for bigger Social Security checks. The good news is, retirees don't need Biden to act to get more benefits in 2022. In fact, seniors will almost definitely be getting more money -- and the benefit increase they see could be the biggest one in more than a decade. Here's why.
Bigger Social Security checks are coming next year for this simple reason
Retirees will likely see higher checks in 2022, even if no new laws pass addressing their benefits, because the Social Security program is designed to provide periodic cost of living adjustments (COLAs). These COLAs are built into the program in order for benefits to keep pace with rising inflation.
COLAs don't happen every year, though. And in some years, the raise that they provide is very small. In 2021, for example, seniors received just a 1.3% raise, which amounted to less than $20 extra per month for most retirees.
But things are looking quite different for 2022. See, COLAs are determined based on year-over-year price changes in the Consumer Price Index for Urban Wage Earners and clerical workers (CPI-W). The CPI-W results for the third quarter of each year are compared to the results from the year prior to estimate how much prices have increased.
So far this year, CPI-W data shows that prices have increased substantially compared with costs in 2020. This is unsurprising, since the U.S. has been experiencing a period of heightened inflation as the pandemic comes to an end and demand for goods and services rises quickly, helped along by stimulus checks.
In fact, early evidence for the year suggests seniors could be on track for more than a 4% COLA in 2022 -- which would be the largest increase since January 2009, when seniors got a 5.8% raise.
Of course, this isn't all good news, since retirees will see their living expenses rise due to the effects of the very inflation that resulted in the higher COLA. And, in fact, there's some evidence to suggest that retirees lose buying power over time -- even when they receive COLAs. That's because CPI-W isn't a very accurate measurement of rising prices for their particular demographic group.
Still, the fact is that seniors are on track to get more money in each Social Security check next year -- and perhaps much more than they are currently receiving. And retirees will see these larger checks even if Washington remains gridlocked when it comes to making changes to Social Security benefits.