generic Social Security Benefits 2022: How Medicare Will Significantly Impact Those Earning Less
The 5.9% raise Social Security recipients will get in 2022 is the largest in 40 years, but for those whose checks are not that big, the raise will barely be enough to offset higher Medicare Part B costs.
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Next year’s cost-of-living adjustment will increase the average retirement check by $92 to $1,657 a month, according to an analysis by AARP. The maximum monthly benefit for a worker who retired at full retirement age will climb by $197 to $3,345.
Even Social Security recipients who are lower on the financial scale will get a boost, with the maximum monthly payment for this group rising by $47 to $841 for individuals and by $70 to $1,261 for couples.
The big COLA hike for 2022 is in response to skyrocketing inflation, and therein lies one of the problems. With inflation running at more than 6% in recent months, the 5.9% COLA might be break-even at best. When you factor in the rising cost of heath care, many Social Security recipients will realize minimal gains.
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Medicare Part B premiums — which are deducted directly from most Social Security retirement payments — will rise to $170.10 per month in 2022, an increase of $21.60 from last year. That will “take an exceptionally large chunk” out of the COLA raise, said Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League.
“Your effective COLA, after deducting for Part B premiums, will be less than 5.9% and, depending on the size of your monthly Social Security check, may be a lot less,” Johnson wrote in an email statement to GOBankingRates. “Those with the lowest benefits won’t see as much left over.”
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As AARP pointed out, someone with a $1,000 Social Security benefit in 2021 would have netted $851.50 a month after the 2021 Part B premium of $148.50 a month was deducted. Next year, that same person’s Social Security payment would rise to $1,059, but after deducting $170.10 for Medicare, the net payment would be $888.90 — just $37.40 more than in 2021.
One problem is that the COLA is tied to the consumer price index and doesn’t take into consideration increases in Medicare Part B premiums.
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This article originally appeared on GOBankingRates.com: Social Security Benefits 2022: How Medicare Will Significantly Impact Those Earning Less
