Oct 13, 2021 - Economy

Retirees will see a jump in social security payments next year

Data: Social Security Administration; Chart: Axios Visuals

Seniors will see the steepest jump in their Social Security payments in 40 years, the government said today — a boost that affects one in five American households.

Why it matters: A worker shortage is pushing up wages alongside rising costs. But those who don't work only feel the higher expenses, so the government is playing catchup with the pandemic-era inflation surge.

How big the windfall feels boils down to the question of the moment: Whether soaring costs are fleeting, or stickier, than officials — from the Fed to the White House — anticipate.

  • The cost-of-living adjustment amounts to an additional $92 per month on average in seniors' pockets. The change takes effect next year.
  • "If in 2022 we see equal or even greater price rises and revisions to long-range inflation forecasts, it’s a different picture" for how much better off seniors will be, retirement economist Naomi Fink told the Wall Street Journal.

The backdrop: The stretch of inflation isn't just lingering — prices are rising at a faster pace, data out this morning show.

  • Inflation rose 0.4% last month, a tad bit more than the monthly climb in August (0.3%).

The bottom line: The payment bump is "crucial for Social Security beneficiaries and their families as they try to keep up with rising costs," AARP CEO Jo Ann Jenkins said in a statement.

Go deeper