Retirees ages 65 and older need to watch out for premium hikes for Medicare Part B, which are expected to rise in 2022 and could erode some of the COLA increases in Social Security.
Part B covers outpatient and diagnostic services. Its monthly premium, which is deducted from Social Security benefits, changes on a yearly basis.
The Social Security Administration noted: "Information about Medicare changes for 2022, when announced, will be available at www.medicare.gov. For Social Security beneficiaries receiving Medicare, Social Security will not be able to compute their new benefit amount until after the Medicare premium amounts for 2022 are announced. Final 2022 benefit amounts will be communicated to beneficiaries in December through the mailed COLA notice and "my Social Security" Message Center."
The boost to benefits is the highest in decades. By comparison, other sizable inflation-adjustments for Social Security included: 5.8% for payments in 2009, 5.4% in 1991, 7.4% in 1982 and 11.2% in 1981. The largest increase was 14.3% in 1980, according to Social Security data.
The cost of living adjustment was a mere 1.3% in 2021 — raising the average benefit by about $21 for monthly payments and making it one of the lowest increases on record since 1975 when Social Security started automatic annual cost-of-living allowances.
Some who are older still benefit from legacy pensions and others who were able to save are now tapping into IRAs and 401(k) plans.
But AARP notes that Social Security remains the largest source of retirement income for most Americans and provides nearly all income — 90% or more — for one in four seniors.
AARP Chief Executive Officer Jo Ann Jenkins said in a statement that the "guaranteed benefits provided by Social Security and the COLA increase are more crucial than ever as millions of Americans continue to face the health and economic impacts of the pandemic."
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