by Calculated Risk on 10/13/2021 08:55:00 AM
With the release of the CPI report this morning, we now know the Cost of Living Adjustment (COLA), and the contribution base for 2022.
From Social Security: Social Security Announces 5.9 Percent Benefit Increase for 2022
Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans will increase 5.9 percent in 2022, the Social Security Administration announced today.
The 5.9 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2022. Increased payments to approximately 8 million SSI beneficiaries will begin on December 30, 2021. (Note: some people receive both Social Security and SSI benefits). The Social Security Act ties the annual COLA to the increase in the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statistics.
Some other adjustments that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $147,000 from $142,800.
Currently CPI-W is the index that is used to calculate the Cost-Of-Living Adjustments (COLA). Here is a discussion from Social Security on the current calculation (5.9% increase) and a list of previous Cost-of-Living Adjustments.
The contribution and benefit base will be $147,000 in 2022.
The National Average Wage Index increased to $55,628.60 in 2020, up 2.83% from $54,099.99 in 2019 (used to calculate contribution base).