Social Security Cost of Living Adjustment

Each year, the Social Security Administration (SSA) announces a cost of living adjustment (COLA) to benefit amounts. This COLA is intended to help benefit recipients keep up with the ever-changing costs of living in the United States. The SSA bases its annual COLA on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

In the summer of 2021, consumer price index data led many people to believe that there might be a 6.2 percent COLA for 2022, though the official COLA for this year was 5.9 percent. This is still substantially higher than the 1.3 percent increase in 2021. Over 70 million people should have seen an increase in their benefit amounts beginning on January 1, 2022.

While no one will complain about increased benefits, such a high COLA is not necessarily good news. This is because a higher COLA means higher inflation and increasing prices for basic necessities. This is the highest COLA since a 7.4 percent increase in 1982, and the closest amount was a 5.8 percent increase in 2009 during the Great Recession.

COLA Overview

The SSA began adjusting benefits for the cost of living considerations in 1975. The purpose of the COLA program is to make sure that people receiving benefits do not lose their purchasing power due to inflation. The calculation looks at the Consumer Price Index data from the third quarter of the previous year to the third quarter of the current year, and the COLA takes effect in January of the next year.

The change in benefits helps to prevent inflation from draining value from SSDI and SSI. When there is no price index increase, there will be no COLA for that next year.

Changes Due to the 2022 COLA

The high COLA means that the maximum SSI benefit payment went from $794 per month to $841 per month for individuals. For married couples who receive benefits, the maximum amount increased from $1,191 per month to $1,261 per month.

Other changes include:

  • The taxable minimum for income (earnings subject to Social Security taxes) went up to $147,000
  • The income threshold for people not yet at full retirement age increased to $19,560
  • The income threshold for people who will reach their full retirement age during 2022 increased to $51,960
  • Substantial gainful activity (SGA) thresholds increased to $970 per month for trial work periods, $1,350 per month for non-blind individuals, and $2,260 per month for blind individuals.

Who Qualifies for Social Security Benefits?

There are two different benefits programs under the SSA – Supplemental Security Income (SSI) and Social Security Disability Income (SSDI). If you fall into one of the following categories, you might be eligible for benefits.

Disabled Adults

If you have a disability and cannot work, and you paid into the Social Security system through your taxes, you might qualify for SSDI payments. Proving your disability can be a challenge, however, and many SSDI benefit claims are denied up front. Disabled adults might also qualify for SSI if they meet the income and asset thresholds. An experienced Social Security lawyer can help you seek the benefits you deserve.

Widows or Widowers

If you were married to someone who received benefits and they passed away, you can receive a portion of their SSDI benefits. To qualify, you must be aged 50 to 59, and you must have been married at least nine months prior to your spouse passing away.

Adult Disabled Children

If you are a disabled adult and one of your parents had Social Security coverage, you can receive a portion of their SSDI benefits. The child must have become disabled before age 22 and must not be married. The parent who is insured by Social Security must have either passed away, become disabled, or retired.

Blind Individuals

If you meet the SSA’s definition of blindness, you can receive either SSI or SSDI benefits. The SSA has special guidelines for people with blindness – for example, they can continue to work and earn more money than others without jeopardizing their benefits. Their maximum benefits are also higher than other maximum SSDI benefits.

A Social Security Lawyer Can Help

If you need assistance with any type of Social Security benefit claim or concern, you should consult with an attorney who handles Social Security cases. Never risk losing benefits you need to support yourself if you cannot work – reach out to a trusted OC social security disability lawyer for assistance as soon as possible.