Whether that really is the bump retirees will see on their monthly checks in 2022 depends a lot on the economy, including whether the Federal Reserve decides to raise interest rates.
The 5.3% estimate was calculated by the Senior Citizens League, a non-partisan group of seniors, based on data from the Bureau of Labor Statistics Consumer Price Index through May.
If this amount were to be met, it would be the largest annual adjustment since 2009, when benefits increased by 5.8%.
In 2021, Social Security beneficiaries benefited from a 1.3% increase in their monthly checks.
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The Senior Citizens League previously estimated that the COLA for 2022 could be 4.7%, based on data through April.
The annual social security cost of living adjustment is calculated from the consumer price index for urban and office workers, or CPI-W. There are still four months of data left before the official estimate for next year is determined.
The month-to-month jump in the Senior Citizens League estimate is due to rising costs caused by inflation, says Mary Johnson, senior citizens’ social security and health insurance policy analyst League.
The price of gasoline saw the biggest increase, increasing 56.2% from May 2020 to May 2021.
Prices for used cars and trucks increased 29.7% during this one-year period.
However, not everything has increased. The cost of ground beef, for example, fell 5.8%.
How these prices move in the coming months – and whether next year’s cost-of-living adjustment stays the same, goes up or down – will depend on those consumer costs.
Any action by the Federal Reserve could change the trajectory of these prices. Although the Federal Open Market Committee is meeting this week, the central bank is not expected to announce any changes. He could, however, indicate how he sees his plans for the future.
“A lot will depend on what happens next,” Johnson said. “If they say they will raise interest rates, it will be very interesting to see how that impacts the COLA. “