WASHINGTON (AP) — Millions of Social Security recipients will get an 8.7% increase in their benefits in 2023, a historic increase but one that will be partially eaten up by rising costs of daily living.
The cost of living adjustment The Social Security Administration said Thursday that — the largest in more than 40 years — the average recipient will receive an extra $140 a month starting in January.
While Social Security recipients welcomed the benefit increase, many said it was not enough to offset the impact inflation.
“It doesn’t help much,” said Shirley Parker, 85, of Chatham, on Chicago’s South Side.
Household maintenance costs and high food prices cut into her budget drastically. “The food is ridiculous. I walk out with a bag full of groceries – $50 – I don’t have about 10 items,” he said.
A separate government report on Thursday showed a new acceleration in inflation. The consumer price index rose 0.4% in September after just 0.1% in August, and has risen 8.2% over the past 12 months. Jobless claims for unemployment benefits rose during the week.
The Social Security Administration said the estimated average monthly Social Security benefit for all retired workers will be $1,827 starting in January. according to the agency’s data sheet.
An increase in Social Security benefits will be combined with a 3% reduction in Medicare Part B premiumsthat is, retirees will receive the full impact of the Social Security increase.
“This year’s significant Social Security cost-of-living adjustment marks the first time in more than a decade that Medicare premiums have not increased, and shows we can do more to support older Americans who rely on the benefits they’ve earned,” he said. Acting Commissioner of Security Administration Kilolo Kijakazi.
President Joe Biden reiterated Thursday afternoon that the Medicare premium cuts will have some impact on retirees’ wallets. “Seniors will outpace inflation next year,” Biden said. “For the first time in 10 years, their Social Security checks will increase while Medicare premiums decrease.”
AARP CEO Jo Ann Jenkins said the benefits increase would “provide much-needed relief to millions of Americans.”
A number of government indexes show that inflation is hitting older Americans harder than the rest of the population. Medical expenses are a large part of the burden.
The Social Security announcement comes a few weeks ago midterm electionsand at a time when Democrats and Republicans are now sparring over high prices and how best to financially strengthen the program in the future.
William Arnone, chief executive of the National Academy of Social Security, an advocacy organization for Social Security, said the benefit increase is “no reason for complacency” because it won’t help all recipients beat inflation, especially if prices continue to rise.
“There are already signs that healthcare inflation will go through the roof next year,” Arnone said.
Margaret Thoman, 78, of Garner, North Carolina, who stopped working to care for her mother, who has since died, called the 8.7% increase “pretty stingy.”
“I think most of our seniors who get Social Security are grateful for that Social Security,” he said. “But that gratitude sometimes masks or replaces a certain sense of anger at having paid into a system for so long and still struggling to survive.”
About 70 million people receive Social Security benefits, including retirees, the disabled, and children. That would be the biggest benefit increase baby boomers, born between 1946 and 1964, have ever seen. The COLA was last higher in 1981 at 11.2%.
Willie Clark, 65, of Waukegan, Illinois, says his budget is “really tight” and an increase in his Social Security disability benefits could give him some breathing room to pay for his savings.
Still, he doubts how much of the extra money will end up in his pocket. Her rent is based on her income in an apartment subsidized by the U.S. Department of Housing and Urban Development, so she expects that to increase as well.
Social Security is financed by payroll taxes collected from workers and their employers. The maximum amount of earnings subject to Social Security payroll taxes for 2023 is $160,200, up from $147,000 in 2022.
The establishment of the funding dates back to the 1930s, when President Franklin D. Roosevelt believed that a payroll tax would create a sense of ownership among average Americans that would protect the program from political interference.
Next year’s higher payout, without an accompanying increase in Social Security contributions, could put additional pressure on a system already facing severe shortfalls in the coming years.
Annual Social Security and Medicare trustees report Released in June, the program’s trust fund may not be able to pay full benefits starting in 2035, it said.
If you have faith stock runs out The report states that the government will be able to pay only 80% of the planned benefits. If the fund runs out, Medicare will be able to pay 90% of total scheduled benefits.
A January Pew Research Center poll found that 57% of US adults said “taking steps to make Social Security financially sound” is a top priority for the president and Congress to address this year. Securing Social Security received bipartisan support, with 56% of Democrats and 58% of Republicans calling it a top priority.
Some solutions to reform Social Security have been proposed, but none have advanced in a deeply partisan Congress.
House Speaker Nancy Pelosi said Thursday’s COLA announcement was a reminder: “Extreme MAGA Republicans are openly plotting new schemes to cut seniors’ benefits and increase spending, including threatening to wreak economic havoc by holding the debt limit hostage to their toxic agenda. “
At the beginning of this year Sen. Rick Scott, R-Fla., issued a detailed plan It would require Congress to come up with a proposal to adequately fund Social Security and Medicare, or potentially eliminate them.
Senate Minority Leader Mitch McConnell, R-Ky., publicly rebuked the plan, and Biden used Scott’s proposal as a political blow against Republicans ahead of the midterm elections.
“If Republicans in Congress have their way, seniors will pay more for prescription drugs and their Social Security benefits will never be met,” said White House Press Secretary Karine Jean-Pierre.
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Claire Savage in Chicago and Hannah Schoenbaum in Raleigh, North Carolina contributed to this report.
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