Social Security COLA Changes: How They Affect SSD Benefits in 2022

In 1975, the Social Security Administration (SSA) began reviewing the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The SSA does this to determine annual cost-of-living adjustment changes (COLA) for disability beneficiaries. Think of this adjustment as a small “raise” for people’s monthly disability checks. Social Security COLA changes varied significantly over recent decades. However, some years didn’t see any COLA updates at all. It’s interesting to track these Social Security COLA changes, since they impact millions of Americans.

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Historic Social Security COLA Change for 2021 Brings Largest Raise in 40 Years

Yes! The latest Social Security COLA increase (5.9%) is massive compared to last year’s 1.3% raise. In fact, it’s the largest single-year COLA raise since 1982. Here’s how 2021’s COLA affects anyone approved for federal disability payments:

• SSDI beneficiaries: Maximum monthly payment goes up to $3,345; average disabled worker payment increases to $1,358/month. The average disabled worker with a spouse and one or more dependent children will see their SSDI benefits rise to $2,383/month.
• SSI beneficiaries: Maximum monthly individual benefit rises to $841/month; for couples, it’s $1,261/month.

How Did the SSA Calculate This Latest Social Security COLA Change?

Social Security COLA equals index growth from the highest Q3 average CPI-W recorded (usually the previous year) to the average CPI-W for Q3 this year. In plain English, the CPI tracks inflation and how much prices changed over 12 months. Let’s say in 2020, gas cost $2.46 per gallon. But in 2021, I paid $2.61 per gallon for gas. The CPI-W averages how much that gas cost consumers in every U.S. state. Then, the CPI-W converts that number into a percentage. (This annual CPI calculation also includes average price for services and wages in the U.S.)

This means in September 2021, people that track CPI-W saw average prices go up about 5.9% over September 2020 prices. So in October 2021, the government approved a 5.9% Social Security COLA raise. This 5.9% higher Social Security COLA payment is effective from December 31, 2021 through December 31, 2022. If average prices for goods, services and wages fall or stay the same, there’s no COLA increase. But if prices go up, then COLA rises again.

Before 1975, legislation set any increase in disability benefit payments. Since 1975, the SSA uses the CPI-W to determine any annual COLA changes.

Why Isn’t There A Social Security Raise Every Single Year?

You’re probably thinking, “prices still keep going up every year. Why don’t my benefit payments go up, too?” Here’s why: If average prices go down or stay the same the next year, there’s no Social Security COLA increase. Here are the most recent years without a COLA increase (or payments rose less than 1%):

• 2009
• 2010
• 2015
• 2016 (.3% increase)

To see each year’s Social Security COLA change percentages, take a look at this table on the SSA’s website.

Tracking Higher COLA Changes From Decades Past

When these Social Security COLA adjustments began in the mid-1970s, they were significant. Annual inflation was extremely high in the 1970s (much higher than it is today). So, any Social Security COLA changes reflected that high inflation rate. For example, in 1975, SSD benefits increased 8% over the previous year. Then in 1979, they increased another 9.9%. Social Security COLA saw a record 14.3% increase in 1980, then that amount rose another 11.2% in 1981. Since that first decade using the new CPI-W calculation formula, most Social Security COLA increases seemed steady, but fairly low. Throughout the 1980s, Social Security COLA rose between 1%-4% every year. The biggest COLA increases since then happened in 2021 (5.9% increase) and 2008, which saw a 5.8% raise in benefits.

With no measurable COLA changes from 2015-2016, many disability beneficiaries welcomed the last two years’ increases. According to the SSA, the latest COLA change adds $92 in monthly Social Security retirement benefits, on average. That brought the average Social Security payment up from $1,565/month in 2021 to $1,657 in 2022. For SSD beneficiaries, average payments rose from $1,282/month in 2021 to $1,358 in 2022.

Which Years Had The Highest Social Security COLA Raises Since 1975?

Since 1980, only a handful of years saw COLA increases that rose above 4%. Below, we’ve listed the highest COLA increase years going back to 1975:

• 1975: 8%
• 1976: 6.4%
• 1977: 5.9%
• 1978: 6.5%
• 1979: 9.9%
• 1980: 14.3%
• 1981: 11.2%
• 1982: 7.4%
• 1987: 4.2%
• 1989: 4.7%
• 1990: 5.4%
• 2005: 4.1%
• 2008: 5.8%
• 2021: 5.9%

If you average each year’s COLA going back to 1975, it’s 3.7%. Since 2000, the average increase is just 2.3%. Over the last decade, that average shrank to just 1.9% going back to 2010.

Whose Benefits Go Up With Every COLA Increase?

Each year’s COLA impacts retired workers receiving Social Security payments, those receiving Supplemental Security Income (SSI) and disabled veterans. Social Security COLA doesn’t directly impact federal military retirement program benefits. However, these programs use the same timeframe and measuring formula as the SSA to compute the next year’s payment amounts.

About 75.2% of Social Security benefits go to retired workers, their spouses and children. Another 13.1% goes to disabled workers, their spouses and children. Lastly, 11% of Social Security benefits go to surviving relatives of deceased workers.

More than one in four 20-year-olds today will become too disabled to work before full retirement age (67). Yet in November 2021, just 2.8% of the U.S. population received Social Security disability benefits. More than 5x as many Americans (almost 56 million people) get Social Security retirement or survivors’ benefits.

You May Qualify for Legal Assistance

Wondering if you might qualify for SSD benefits this year? Many applicants find the claim paperwork confusing. The claims process can take weeks or months just to complete submit all your paperwork. Then, you’ll wait 3-5 months, on average, to hear back from the SSA. However, having a lawyer file your SSD claim makes benefit approval nearly 3x more likely! In fact, people who qualify for legal assistance typically get $12,000 in lump-sum backpay as well as monthly benefits. Those who apply on their own without legal assistance usually appeal at least twice and wait 18+ months for disability payments.

A Social Security lawyer charges nothing for free claim help over the phone. If the SSA won’t approve your claim, you owe the lawyer $0. And if you do win benefits, then your lawyer receives a small, one-time fee.

Ready to see if you may qualify? Click the button below to start your free disability benefits evaluation now.

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