Retirees got some seemingly good news recently when the Social Security Administration announced that Social Security beneficiaries would be getting a 5.9% cost of living adjustment (COLA) in 2022. This is the largest raise in four decades, and it means that retirees will, in theory, end up with much more money.
The problem is, two pieces of really bad news followed, meaning most seniors won’t end up better off despite bigger checks. In fact, many will end up in a worse financial situation in terms of how far their money goes. Here’s why.
1. Medicare premiums are going up 14.5%
Seniors typically rely on Medicare for their healthcare coverage. In fact, most retirees have Medicare premiums withdrawn directly from their Social Security checks. These premiums are charged for Medicare Part B, which is the part of Medicare that pays for routine care rather than hospitalizations.
Unfortunately, Medicare premiums will rise sharply in 2022. The standard monthly premium will jump from $148.50 in 2021 to $170.10 in 2022. This $21.60 increase is a 14.5% jump, and it will eat up a good portion of the Social Security raise retirees are receiving. The Medicare Part B deductible is also increasing by $30 next year, jumping from $203 in 2021 to $233 in 2022. That will leave seniors on the hook for even more costs.