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(CNN) -
Social Security recipients in the United States will receive an annual cost-of-living adjustment of 5.9% next year, the largest increase since 1982, the Social Security Administration announced Wednesday.
The increase will increase retiree monthly payments by $ 92 to an estimated average of $ 1,657 by 2022.
"This would be the highest COLA [cost of living adjustment] that most beneficiaries living today have seen," said Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League.
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But that doesn't mean they can spend a lot of money.
The reason for the increase is that inflation is also skyrocketing.
The approximately 70 million people who receive Social Security, including retirees, Americans with disabilities and others, receive a cost of living adjustment, or COLA, each year.
It is based on a one-year increase in inflation and is designed to help beneficiaries cope when prices rise.
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In 2021, the adjustment was 1.3%, which translated into an increase of approximately US $ 20 per month for retired workers.
Over the past 12 years, the increase has averaged 1.4%, according to the league.
After decades of inadequate increases, the 2022 increase finally more equates the rising costs for beneficiaries, said Nancy Altman, president of Social Security Works, an advocacy group.
"But as big as it looks on paper, it's not enough for seniors and people with disabilities on fixed incomes to make ends meet," he said.
About 40% of beneficiaries depend on monthly checks for at least 90% of their income, and two-thirds of beneficiaries depend on payments for at least half of their income.
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The annual increase has not kept pace with the rising costs of goods and services that retirees typically use, according to a recent study by The Senior Citizens League.
The study noted that it has received more than 200 emails in the past month, and many retired and disabled senders say rising inflation is preventing them from paying their bills.
Social Security benefits have lost 32% of their purchasing power since 2000, the advocacy group found.
Annual adjustments have increased payments by a total of 55%, but typical senior spending has increased by almost 105% over the same period.
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The skyrocketing cost of gasoline, used vehicles, home heating oil, bacon, eggs, beef, milk, and home care for the elderly are among the fastest growing expenses for older Americans for the year ending July 2021, the league found.
The national average price of gasoline reached $ 3.27 a gallon on Monday, according to AAA.
That's the highest price in seven years and almost double the price in April 2020.
Housing costs have risen nearly 118% and health care costs have risen 145% since 2000, Johnson said.
These two categories are not properly accounted for in the annual adjustment, he said.
The Social Security cost of living adjustment is based on the Consumer Price Index for Urban Salaries and White-collar Workers, known as CPI-W.
It is slightly different from the broader Consumer Price Index and better known to all Urban Consumers.
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Medicare Part B premiums, which are typically deducted from Social Security checks, are also expected to increase significantly next year.
Medicare trustees estimated in August that the standard monthly premium will increase by about 6.7% by 2022.
Social Security finances remain on shaky ground.
The trust fund that pays benefits to retirees and their survivors will be depleted by 2033 and will only be able to distribute about three-quarters of the promised payments unless Congress addresses the program's long-term funding shortfall, according to the most recent report. from the Social Security trustees.
That's a year earlier than reported in 2020 due to the pandemic, which reduced the number of workers paying Social Security taxes.
But the long-term effects of COVID-19 on trust funds remain unclear.
Maximum earnings subject to tax will increase to $ 147,000 by 2022, up from $ 142,800 this year.
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