Social Security Increased 8.7%
In an effort to counteract the impacts of inflation, Social Security claimants will receive the largest rise in benefits in forty years next year, the federal government announced on Thursday. For around 70 million Americans who are eligible, Social Security payouts will increase by 8.7% in 2023, according to the Social Security Administration.
According to the federal agency, in 2022 the government will distribute more than $1 trillion to 52.5 million Americans over the age of 65 and roughly 18 million other people who qualify for benefits, such as survivors of insured workers and people with disabilities. The cost to taxpayers of the 8.7% hike for 2023 will be close to $100 billion. Since payments were increased by 11.2% in 1981, the cost-of-living adjustment is the largest amount recipients have ever received.
After the cost-of-living increase, the average retiree will start receiving $1,827 in monthly Social Security payments in January. In comparison to the previous average of $1,681 in 2022, that number represents an increase of $146 a month. The rise was made public on the same day that the most recent federal inflation data revealed prices rose by an unexpectedly high 8.2% in September. American households now pay more for basic goods like food, rent, and electricity, which has reduced their purchasing power.
In addition to the increase in benefits, beneficiaries of Social Security will have a 3% decrease in their Medicare Part B premiums, which are associated with physician visits and hospital outpatient treatments.
According to a statement by the Social Security Administration’s acting commissioner Kilolo Kijakazi, “Medicare premiums are decreasing and Social Security payouts are increasing in 2023, which will give seniors more peace of mind and breathing room.”
“This year’s significant Social Security cost-of-living adjustment shows that we can provide additional help to older Americans who depend on the benefits they have earned,” Kijakazi continued. “Medicare premiums are not rising for the first time in more than a decade.”
Colby Nelson, the spokesman for AARP, praised the modifications and said that the larger monthly payments will “bring much-needed relief to millions of Americans.” Analysts from the advocacy group Senior Citizens League said a rise of this size is “unusual,” and urged senior citizens to “enjoy it now.”
“Social Security benefits purchase less over time without a COLA that effectively maintains pace with inflation, and that can generate challenges especially as older Americans live longer in retirement,” the researchers added.
According to Mark Hamrick, senior economic analyst at Bankrate, Social Security users “are making up for some lost ground” following an adjustment of just 5.9% last year.
Given the stressed situation of Social Security and growing concerns that the program may soon run out of funding, the significant increase in payouts, however, could have long-term effects. The possibility of greater financial depletion for future Social Security benefits is increased by the significant COLA rise, according to Hamrick. That’s in addition to the likely negative effects on funding from an increase in unemployment.