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Social Security benefits will increase 8.7% next year

Social Security benefits will increase 8.7% next year
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WASHINGTON (AP) — Millions of Social Security holders will receive an 8.7% increase in benefits in 2023, a historic increase, but a gain that will be partially consumed by the rising cost of living.

this cost of living adjustment It’s the largest in more than 40 years—meaning the average recipient will receive more than $140 a month extra starting in January, the Social Security Administration said on Thursday.

While Social Security beneficiaries welcomed the increase in benefits, many said it was not enough to offset the impact. inflation.

Shirley Parker, 85, who lives in Chatham on Chicago’s South Side, said it “didn’t help much”.

Home maintenance costs and high grocery prices drastically reduce his budget. “The food is ridiculous. I’m going out with a bag of groceries – $50 – I don’t have about 10 items,” he said.

A separate government report released on Thursday showed inflation just accelerating. The Consumer Price Index rose 0.4% for September, after just 0.1% in August, and has risen 8.2% over the past 12 months. Unemployment benefits applications rose during the week.

The Social Security Administration said the estimated average monthly Social Security benefits for all retired workers will be $1,827 through January. according to an agency fact sheet.

An increase in Social Security benefits 3% reduction in Medicare Part B premiumsmeaning retirees will get the full effect of the Social Security increase.

“This year’s significant Social Security cost-of-living adjustment is the first time in a decade that Medicare premiums haven’t increased, and it shows we can provide more support to older Americans who are confident in the benefits they’ve earned,” Social said. Kilolo Kijakazi, interim commissioner of the Security Administration.

President Joe Biden reiterated on Thursday afternoon his feeling that the Medicare premium cut will have some impact on retirees’ wallets. “The elderly will get ahead of inflation next year,” Biden said. “For the first time in 10 years, Social Security checks will increase while Medicare premiums fall.”

AARP CEO Jo Ann Jenkins said the increased benefits would “provide much-needed relief to millions of Americans.”

Some government indexes show that inflation affects older Americans more than the rest of the population. Medical expenses make up a large part of the burden.

Social Security announcement comes just weeks ago by-electionsand at a time when Democrats and Republicans are splitting opinions about the current high prices and how they can best support the program financially in the future.

William Arnone, chief executive of the National Academy of Social Insurances, an advocacy organization for Social Security, said the benefit increase is “not cause for celebration” because it won’t help all buyers cope with inflation, especially if prices continue to rise.

“There are already signs that healthcare inflation will peak next year,” Arnone said.

Margaret Toman, 78, in Garner, North Carolina, who has since stopped working to care for her deceased mother, described the 8.7% increase as “pretty parsimonious.”

“I think most seniors who get Social Security are grateful for that Social Security,” he said. “But this gratitude sometimes masks or replaces a certain sense of anger that comes with having paid for a system this long and still struggling to survive.”

About 70 million people receive Social Security benefits, including retirees, people with disabilities, and children. This will be the largest benefit increase ever seen by baby boomers born between 1946 and 1964. The last time a COLA rose was 11.2% in 1981.

Willie Clark, 65, of Waukegan, Illinois, says his budget is “really tight” and the increase in Social Security disability benefits could give him some breathing room to cover his deferred household expenses.

Still, it’s doubtful how much of the extra money will go into his pocket. He expects this to increase as well, as his rent for an apartment subsidized by the U.S. Department of Housing and Urban Development depends on his income.

Social Security is funded by payroll taxes collected from workers and their employers. The maximum amount of earnings subject to Social Security payroll taxes for 2023 increased from $147,000 to $160,200 in 2022.

The funding scheme dates back to the 1930s, when President Franklin D. Roosevelt believed that a payroll tax would foster a sense of ownership among average Americans that would protect the program from political interference.

The next year’s higher payout, without an accompanying increase in Social Security contributions, could put additional pressure on a system that faces serious shortfalls in the coming years.

Annual Social Security and Medicare trustee’s report Published in June, it says the program’s trust fund will not be able to pay all benefits from 2035.

if you trust funds run out, The report stated that the government could only pay 80% of the planned aid. Medicare will be able to pay 90% of total planned benefits if funds run out.

A Pew Research Center survey in January showed that 57% of US adults said “taking steps to make the Social Security system 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 were proposed for Social Security reform, but none of them went forward in a sharply partisan Congress.

Speaker of the House of Representatives Nancy Pelosi said on Thursday that the COLA announcement is “a reminder that extremist MAGA Republicans have clearly drawn new plans to reduce benefits and increase costs for seniors, including by threatening to cause economic disaster by holding the debt limit hostage for their toxic agenda.” . ”

Earlier this year, Sen. Rick Scott, R-Fla., published a detailed report. plan This would require Congress to submit a proposal to adequately fund Social Security and Medicare, or potentially phase them out.

Senate Minority Leader Mitch McConnell, R-Ky., publicly scolded the plan, and Biden used Scott’s proposal as a political stick against the Republicans before the midterm elections.

“Older people will pay more for prescription drugs if Republicans in Congress want to, and Social Security benefits will never be guaranteed,” said White House press secretary Karine Jean-Pierre. she said.

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Claire Savage of Chicago and Hannah Schoenbaum of Raleigh, North Carolina contributed to this report.

Follow AP’s inflation coverage: https://apnews.com/hub/inflation

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