Social Security payments will increase by 5.9% next year. This is the biggest cost-of-living increase since the 1980s.
People who receive social security payments are either retired or on disability. They are eligible to receive these stipends based on work history and the government adjusts the amount yearly based on the Consumer Price Index. Well, you may have noticed that the cost of everything is up. The average monthly payment will increase by $197 per month in 2022.
In 2021, the COLA adjustment was 1.3%. It is rare for these adjustments to ever be more than 2% so a 5.9% increase is significant. The last time the increase was that high was 1982 when the adjustment was 7.4%.
For those of you not on social security yet, here is a little tip. Your social security is based on how much you earned during your working years. If you do not report your income, the government thinks that you are a low earner and you will be paid as a low earner in your retirement years. Not reporting your income will shoot you in the foot in your later years. It’s not worth it. Talk to your accountant about this dangerous tradeoff.