Social Security beneficiaries will see an 8.7% rise in their checks in 2023, the Social Security Administration announced Thursday, as the government rushes to keep up with runaway inflation.
The “cost of living adjustment” offers some solace to older adults who have struggled with the shocking price hikes of the last year, which have made every trip to the supermarket or gas station more costly.
It is required by law to ensure that those who receive Social Security don’t see the value of their checks eaten away by inflation.
This year’s increase will bring the average monthly check to $1,827, which is a $146 increase.
On the other side of the ledger, middle-class and wealthy taxpayers will be paying more, as the inflationary adjustment is made to the payroll tax. Workers will now pay on up to $160,200 of their earnings, up from $147,000 this year.
This 8.7% COLA follows a 5.9% hike for this current year. It’s the largest COLA since 1981, which was the last time the country saw such staggering inflationary pressure.
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“The 8.7 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 65 million Social Security beneficiaries in January 2023. Increased payments to more than 7 million SSI beneficiaries will begin on December 30, 2022,” Social Security said in its announcement.
While the COLA may be good news for older adults who rely on Social Security checks, it’s also a reminder of the overall pressures the economy is seeing.
Thursday also brought news that the Consumer Price Index, a key measure of inflation, rose 0.4% in September. That was higher than economists had expected, and it brought the annual rate to 8.2%.
That has cut into Americans’ buying power, even as nominal wages rise. The result is a 4.4% cut in real wages since President Biden took office, according to Republicans on the House Budget Committee.
Last month the government announced it would be able to reduce premiums and deductibles for Medicare Part B, part of the federal health care coverage program for older Americans.
“This year’s substantial Social Security cost-of-living adjustment is the first time in over a decade that Medicare premiums are not rising and shows that we can provide more support to older Americans who count on the benefits they have earned,” said Kilolo Kijakazi, acting commissioner of Social Security.
AARP Chief Executive Officer Jo Ann Jenkins said Social Security’s automatic inflation COLA is an essential protection for older adults, but said the program still needs more work to stabilize it.
It has run a cash-flow deficit for years, and its trust fund is slated to expire next decade, which under the law would mean an immediate and severe benefit cut.
• Stephen Dinan can be reached at firstname.lastname@example.org.
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