Social Security recipients to get biggest boost in over 40 years

WHAT YOU NEED TO KNOW:

• The U.S. Social Security Administration announced that U.S. Social Security recipients will receive the biggest hike in over four decades.
• An 8.7% cost-of-living (COLA) adjustment will take effect in January.
• Officials hope that the hike could help amid the continuing inflation.

As U.S. prices continue to soar, the U.S. Social Security Administration announced on Thursday that U.S. Social Security recipients will receive the biggest boost to their monthly benefits in over four decades.

Starting in January, retirees and other beneficiaries will receive an 8.7% cost-of-living (COLA) adjustment. This means that the average recipient will get $140 more per month in their 2023 benefit checks.

The agency’s website stated that this is the biggest increase since 1981 when benefits increased by 11.2%. Last year, COLA rates increased by 5.9%. But for about a decade, the annual increase was a measly 3%.

The hike will benefit around 70 million recipients of Social Security or Supplemental Security Income (SSI). These include retirees, the disabled, and certain widows, widowers, and children.

Officials hope that the hike could help as the U.S. Labor Department reported an underlying inflation measure’s biggest annual increase in 40 years. The consumer price data, which is also the basis of Social Security adjustments, showed that rent, health care, and food prices continue to soar.

Meanwhile, officials noted that Medicare premiums are decreasing, hopefully providing “more peace of mind and breathing room.”

Social Security Acting Commissioner Kilolo Kijakazi stated, “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.”

Analysts expressed concerns that while the hike could help recipients, it could also put them into higher tax brackets and make them ineligible for other benefits. Others also worried about Social Security’s future solvency.

Still, senior economic analyst Mark Hamrick of Bankrate.com said that the hike will make up “for some lost ground in purchasing power” amid the inflation.

In an effort to bring down prices and curb inflation, the Federal Reserve has been raising interest rates, but these efforts have produced little effect.

Source: Reuters