Next year, the 70 million or so Americans who receive Social Security will see a 5.9% cost-of-living adjustment (COLA) – the greatest increase since 1982. With this increase, retirees will see, on average, an additional $92 in monthly payments. This large increase is in response to high inflation rates, which have made it challenging for Retirees and other Social Security beneficiaries to manage expenses.

The Senior Citizens League, an advocacy group, found home care is one of the fastest-growing expenses, with costs growing 145% since 2000. While Medicare premiums are also estimated to increase in 2022, any additional savings or found funds from the COLA increase could be used to help cover gaps in Medicare coverage. As discussed in our last blog post, Filling Medicare Coverage Gaps, long-term care and in-home care are not typically covered by traditional Medicare plans. With this gap, along with rising costs of in-home care, larger Social Security checks could be well spent on supplemental insurance coverage to support long term aging at home.

One concern associated with the COLA increase for 2022 is depletion of an already waning Social Security trust. Following the economic slump and high unemployment of the COVID-19 pandemic, the trust is depleted and it is estimated that by 2033 only about 75% of promised distributions will be available. With surging inflation, there is a strong need for the large increase in the Social Security COLA; however, the program is facing significant funding concerns. Congress must act to address potential shortages for the program; about half of seniors rely on Social Security for at least 50% of their income, and 25% rely on the payments for their entire income; therefore, action is needed to ensure the long-term viability of these payments.