Last year, the Social Security Administration announced that seniors would receive their largest cost of living adjustment, or COLA, in decades. Fueled by rampant inflation, Social Security benefits are approaching a 5.9% increase this year.
That’s money many seniors can count on before it’s there. If you don’t know exactly when your raise will take place, here’s what you need to know.
It’s all about your date of birth
The first Social Security payment you receive in 2022 must match that 5.9% COLA. And the timing of that payment depends on your date of birth.
If your birthday is between the 1st and the 10th of the month, your benefit should arrive on the second Wednesday of each month. As such, you should see your Social Security COLA on January 12.
If your birthday falls between the 11th and the 20th of the month, your benefit should arrive on the third Wednesday of each month. This means that your increase will take effect on January 19.
Finally, if your birthday falls between the 21st and 31st of the month, your benefit should arrive on the fourth Wednesday of each month. So you should see your COLA on January 26th.
You may not be getting your COLA in full
If you collect social security but still have to enroll in Medicare, you should see your monthly benefit increase by 5.9%. But if you’re enrolled in Medicare Part B and therefore pay your premiums directly from your benefits, your increase may look less substantial.
The reason? Medicare Part B premiums rose to $171.10 this year, up from $148.50 in 2021. That’s an increase from $21.60. So if you receive your first Social Security payment of the year, it reflects a COLA of 5.9% minus that Part B premium increase, leaving you with less cash in your pocket.
How to get the most out of your COLA . fetches
It has been many years since Social Security has come close to a 5.9% increase. Even if you lose some of that money to higher Medicare costs, it still pays to bank on as much of that increase as possible to build yourself a financial buffer.
Admittedly, that can be difficult at a time when the cost of living is rising across the board and everything from groceries to gas and clothing costs extra. The whole reason this year’s COLA was so generous is that inflation levels fueled a larger increase from the third quarter of 2021. If inflation had been less high, seniors would have seen a less generous COLA come through.
But if you are able to save a little bit each month thanks to this year’s COLA, it’s a good idea to put that money away in savings. We don’t know what future Social Security COLAs will look like, but in recent years they have fallen short (and in some years seniors didn’t get any COLA at all). So it pays to build up some cash reserves if you have the chance.