WASHINGTON — In 2023, Social Security benefits for millions of people will go up by 8.7%. This is a big increase, but some of it will be eaten up by the rising cost of living.
The Social Security Administration said Thursday that the biggest cost-of-living adjustment in more than 40 years means the average recipient will get more than $140 more each month starting in January.
Even though Social Security recipients were happy about the increase in benefits, many said it wasn’t enough to make up for the effects of inflation.
It’s “not much help,” said Shirley Parker, who is 85 years old and lives in Chatham on the South Side of Chicago.
Costs for home repairs and high food prices are making her budget very tight. “Food is a waste of time. “I spend $50 and get a bag full of groceries, but I’m missing about 10 things,” she said.
— Social Security (@SocialSecurity) October 13, 2022
Thursday, a separate government report showed that inflation has started to rise again. The Consumer Price Index went up 0.4% in September after going up just 0.1% in August. Over the past 12 months, it has gone up 8.2%. The number of people who asked for unemployment benefits went up for the week.
In a fact sheet, the Social Security Administration said that starting in January, the average monthly Social Security payment for all retired workers will be $1,827.
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Along with the increase in Social Security benefits, Medicare Part B premiums will go down by 3%. This means that retirees will get the full benefit of the increase in Social Security.
“This year’s large Social Security cost-of-living adjustment is the first time in over a decade that Medicare premiums are not going up. “This shows that we can help older Americans who depend on the benefits they’ve earned even more,” said Kilolo Kijakazi, the acting commissioner of the Social Security Administration.
Democrats: Increase Social Security payments by 8.7% to help seniors cover their costs and fight rising prices.
The GOP: Support plans to cut Social Security and voted against lowering prescription drug prices for people on Medicare. https://t.co/2Latlx29SU
— Congressman Troy A. Carter (@RepTroyCarter) October 13, 2022
Thursday afternoon, President Joe Biden agreed with the idea that the Medicare premium cut would help retirees’ finances in some way. “Next year, seniors will be ahead of inflation,” Biden said. “For the first time in ten years, their Social Security checks will go up while their Medicare premiums go down.
CEO of the AARP Jo Ann Jenkins said that the increase in benefits “will give millions of Americans the relief they need so much.”
Several government indexes show that older Americans are hurt more by inflation than younger people. A big part of the burden is the cost of health care.
The announcement about Social Security comes just a few weeks before the midterm elections. It also comes at a time when Democrats and Republicans are arguing about how to fix the program’s finances for the future and how to deal with high prices right now.
William Arnone, head of the National Academy of Social Insurance, a group that supports Social Security, said that the increase in benefits is “no reason to celebrate” because it won’t help all Social Security recipients deal with inflation, especially if prices keep going up.
Arnone said, “There are already signs that health care costs will go through the roof next year.”
A 78-year-old woman in Garner, North Carolina, named Margaret Toman, who had stopped working to care for her mother, who has since died, said that the 8.7% increase was “quite mean.”
“I think that most of us older people who get Social Security are thankful for it,” she said. “But sometimes that gratitude covers up or gets rid of the anger that comes from having paid into a system for so long and still having to struggle to get by.”
About 70 million people, such as retirees, people with disabilities, and children, get money from Social Security. This will be the biggest increase in benefits that people born between 1946 and 1964, who are called “baby boomers,” have ever seen. In 1981, when the COLA was 11.2%, it was the last time it was that high.
“The increase in the COLA, coupled with lower Medicare premiums, will boost Social Security payments in 2023, and that should help retirees who are struggling to keep up with rising prices,” said KFF SVP @tricia_neuman. https://t.co/OM3Tk9EC7y
— KFF (Kaiser Family Foundation) (@KFF) October 13, 2022
Willie Clark, 65, of Waukegan, Illinois, says his budget is “really tight” and that the increase in his Social Security disability benefits could give him some breathing room to pay for household expenses he has been putting off.
Still, he isn’t sure how much of the extra money he will get. His rent in an apartment building subsidised by the U.S. Department of Housing and Urban Development is based on his income, so he expects that it will also go up.
Social Security is paid for by taxes taken out of workers’ and employers’ paychecks. In 2023, the most you can earn before having to pay Social Security payroll taxes is $160,200. This is up from $147,000 in 2022.
The way the programme is paid for dates back to the 1930s, when President Franklin D. Roosevelt came up with the idea. He thought that a payroll tax would give average Americans a sense of ownership, which would keep politicians from messing with the programme.
If people don’t pay more into Social Security to cover the higher payout next year, it could put more pressure on a system that will have a big shortfall in the coming years.
The annual Social Security and Medicare trustees report, which came out in June, says that starting in 2035, the program’s trust fund won’t have enough money to pay full benefits.
The report said that if the trust fund runs out, the government will only be able to pay 80% of the planned benefits. If the fund runs out, Medicare will still be able to pay 90% of all scheduled benefits.
In January, 57% of U.S. adults said in a Pew Research Center poll that “taking steps to make Social Security financially sound” was important “was one of the most important things that the president and Congress worked on this year. 58% of Democrats and 56% of Republicans both said that protecting Social Security was one of their top priorities.
Some ideas have been put forward for how to change Social Security, but nothing has been done because Congress is so divided.
House Speaker Nancy Pelosi said Thursday that the COLA announcement is a reminder that “extreme MAGA Republicans are openly plotting new plans to cut seniors’ benefits and raise their costs, including by threatening to cause an economic disaster by holding the debt limit hostage for their toxic agenda.”
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Sen. Rick Scott, R-Fla., put out a detailed plan earlier this year that would force Congress to come up with a plan to properly fund Social Security and Medicare or possibly phase them out.
Senate Minority Leader Mitch McConnell, R-Ky., publicly criticised the plan, and Biden has used Scott’s plan as a political weapon against Republicans before the midterm elections.
“If Republicans in Congress get their way, seniors will have to pay more for prescription drugs and their Social Security benefits will never be safe,” White House press secretary Karine Jean-Pierre said.
Frequently Asked Questions
When Is The Social Security Increase?
The most recent COLA for both Social Security and SSI payments is 8.7%. Starting with the benefits for December 2022, which will be paid in January 2023, they will go up by 8.7 percent. The amount of federal SSI payments will also go up by 8.7%, starting with payments made in January 2023. Since SSI payments are usually made on the first of the month, and January 1 is a holiday, January’s payments are always sent at the end of December.
What Is The Max Social Security Tax For 2023?
The Social Security Administration (SSA) said on Oct. 13 that the maximum earnings subject to the Social Security payroll tax will rise by nearly 9 percent to $160,200 on Jan. 1, 2023. This is up from the maximum of $147,000 for 2022. The Social Security Administration (SSA) also posted a summary of the 2023 cost-of-living adjustments (COLAs).
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