In January, the Social Security checks of more than 69 million beneficiaries will rise by 5.9%. That cost- of - living adjustment (COLA) will increase an average monthly retiree benefit of $1,565 by $92 per month — far more than the meager inflation adjustments over most of the past 12 years when COLAs averaged just 1.4%. But beneficiaries will see a significant chunk of that consumed by Medicare Part B premiums, which are automatically deducted from Social Security benefits. Part B premiums are increasing by $21.60 per month, rising from $148.50 in 2021 to $170.10 in 2022 and much more if you have higher income. Unfortunately, that’s just the tip of the iceberg of rising costs for heating, gasoline, housing, transportation, and food.
While Social Security recipients will receive the highest (COLA) in 4 decades, tens of thousands of you tell us that more is needed to help Social Security recipients get through rampant rising prices. As of November 12, 2021, more than 87,500 of you have signed our petition calling on Congress to provide another round of $1,400 stimulus checks, this time targeted to Social Security recipients.
The petition reads:
I (and/or my spouse) want Social Security recipients to receive a $1,400.00 emergency stimulus check to cope during this unprecedented inflationary year. Social Security benefits are one of the few types of income in retirement adjusted for inflation. But soaring inflation has taken a toll on household finances of retired and disabled Social Security recipients. In 2021 Social Security benefits increased by just 1.3 percent raising the average benefit by only about $20 a month. But about 86 percent of Social Security recipients surveyed say their expenses increased by much more than that amount. As one of the many supporters of TSCL who reside in your constituency, I strongly urge you that NOW is the time that you MUST support an emergency $1,400.00 stimulus check to Social Security recipients.
The stimulus proposal has raised a few questions. Some policy makers point to the high COLA, questioning whether Social Security recipients really need another $1,400 stimulus check. But most Social Security beneficiaries say, “it’s long overdue,” because COLAs have rarely kept up with the rising costs experienced by most Social Security recipients.
In addition to the higher costs felt today, a COLA adjustment of 5.9% will also mean higher taxes. The COLA will boost Social Security income, and that could potentially affect the taxable income of roughly half of all Social Security households in the 2022 tax year. In a recent letter to Representative Jason Smith (MO-8), Ranking Member of the House Committee on the Budget, the Congressional Budget Office (CBO) wrote “…you asked who pays higher taxes when inflation rises…” Among those who will pay higher taxes are Social Security recipients, the CBO said, because the income thresholds that subject Social Security benefits to taxation are not indexed for inflation. Because the income thresholds aren’t adjusted, that will “subject a greater share of Social Security benefits to taxation,” the CBO wrote. Depending on income, up to 85% of Social Security benefits can be taxable when the adjusted gross income is over $25,000 (for single filers) and $32,000 (for married taxpayers filing joint returns).
TSCL is advocating for stimulus payments to Social Security recipients because like an advance refundable tax credit, stimulus payments are not counted as income. Thus a $1,400 stimulus check would not increase taxable, income but could help offset higher taxes. In addition, for Social Security recipients who also receive benefits from low-income programs such as SNAP, rental assistance, and Medicare Savings Programs, a stimulus check could help offset benefit reductions that low - income Social Security recipients may potentially experience. This occurs when the COLA increases incomes over income limits.
If you haven’t signed the $1,400 stimulus petition yet, do so now!
Sources: Letter to Honorable Jason Smith, Ranking Member House Committee on the Budget, Phillip L. Swagel, Director, Congressional Budget Office, September 1, 2021.