Yesterday we talked about why the recently announced Social Security cost of living adjustment for 2022 is important to people who are not yet Social Security claiming retirees.

Today it’s time to talk about those who are already claiming Social Security.

This list has less surprises, but it isn’t any shorter.

• There will be a cost of living adjustment for 2022, and after 12 years of 0.0% to 3.6% “raises”, it will be a large 5.9%.
• The Social Security cost of living adjustment value is based on CPI-W, an inflation factor based on “urban hourly wage earners and clerical workers”, representing 32% of the US population, weighted mostly on food, clothing, transportation, and goods/services; down-weighting housing, medical care, and recreation. Except housing and medical care are major non-discretionary expenses for retirees, while recreation is a major discretionary expense for retirees in good health. And therefore you may find that despite the generous appearing size of this inflation adjustment, it may not cover the increase in your expenses, especially if many of your expenses are in the down-weighted category.
• Individualized COLA notices, with your new benefit amount, will be mailed in December 2021. If you want to get that information as early as early December, you can log in to your “my Social Security” account.
• You will first see the adjustment in your January 2022 Social Security check/direct deposit.
• If you are working and less than your full retirement age, in addition to collecting Social Security, the threshold for how much you’re allowed to earn before your Social Security benefit is reduced (via the retirement earnings test) will be increased too.

Now that you know the impact, here’s your to do list:

• Track your expenses for November 2021.
• Mark your calendar for mid-December 2021, to look for your individualized COLA notice.
• Once it arrives, calculate how much of your expenses your new COLA-adjusted Social Security check will cover.
• Calculate what the new 2022 monthly or quarterly withdrawal from your investment accounts will need to be, to cover your inflated expenses beyond your newly increased Social Security check.

You’re all set!

If you’ve got kids or grandkids, send them back to yesterday’s post so they can learn how it will impact them too.