For months, seniors on Social Security have been waiting to hear what 2022's cost-of-living adjustment, or COLA, will look like. That number is calculated based on third-quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), and so a COLA couldn't be determined until inflation data for September was made available.

This week, the Social Security Administration announced that seniors will be in line for a 5.9% COLA in 2022. That's a major improvement from the 1.3% they received for 2021.

Or is it? A giant COLA might seem like a wonderful thing for seniors. But in reality, it's not the massive windfall Social Security recipients might think it is.

Social Security cards.

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It's all about keeping up

The purpose of COLAs is to help seniors maintain their buying power in the face of inflation. If seniors were to start out collecting a single benefit and keep getting that same benefit over the course of 20 or 30 years, they'd eventually be unable to keep up with their living costs.

The reason 2022's COLA is so large is that inflation has been rampant this summer, driving up the cost of food, gas, and just about everything else. While a giant raise may be helpful to seniors, it's also apt to get instantly swallowed by higher living costs across the board. In fact, based on the way consumer prices are trending, it's unlikely that seniors will manage to come out all that far ahead in 2022, even with a large COLA at play.

Seniors need outside income

All of this points to one very important lesson -- one that future Social Security beneficiaries should take to heart. It's OK to rely on Social Security to provide some amount of retirement income, but retiring on Social Security alone is a bad idea.

For average earners, Social Security will replace about 40% of their pre-retirement paychecks. But most seniors need around twice that much income to enjoy a comfortable lifestyle.

Furthermore, rising healthcare costs have made it so that Social Security does a poor job of helping seniors keep up with their expenses. So workers today should take steps to save for retirement independently and be less reliant on Social Security once their time in the workforce comes to an end.

There are several options in this regard, and IRAs or 401(k) plans are a good starting point. These retirement savings plans are widely available and don't come with income limits (Roth IRAs being the one exception), and they offer a host of tax benefits that allow savers to benefit in the near term, as well as the future.

Meanwhile, workers enrolled in high-deductible health insurance plans can take advantage of health savings accounts, or HSAs. These accounts allow workers to contribute funds on a pre-tax basis toward immediate or long-term medical costs. Funds that aren't used can be invested and carried forward indefinitely, giving seniors a dedicated cash source for their medical bills during retirement.

Generous COLAs are a mixed bag

It's easy to get excited about the generous Social Security raise that's on the horizon. But in reality, the whole reason behind that large COLA is the fact that the cost of living has soared.

Workers today should recognize that even when a giant COLA comes down the pike, Social Security's buying power is limited. That reality check should prompt them to save independently for retirement to avoid financial struggles and maintain a decent standard of living.