Social Security benefits will increase by 8.7% | News, Sports, Jobs
WASHINGTON (AP) — Millions of Social Security recipients will get an 8.7% increase in their benefits in 2023, a historic increase but a gain that will be partly swallowed up by the rising cost of daily living.
The cost-of-living adjustment — the largest in more than 40 years — means the average recipient will receive more than $140 extra per month starting in January, the Social Security Administration announced Thursday.
While Social Security recipients welcomed the increase in benefits, many said it was not enough to cover the impact of inflation.
This is “not much help” said Shirley Parker, 85, who lives in Chatham, in Chicago’s South End,
Home maintenance costs and high grocery prices are taking a toll on his budget. “The food is ridiculous. I walk out with a bag full of groceries – $50 – I don’t have about 10 items,” she says.
A separate government report released on Thursday showed a further 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 increased over 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 an agency fact sheet.
The increase in Social Security benefits will be associated with a 3% drop in Medicare Part B premiums, meaning that retirees will fully benefit from the increase in Social Security.
“This year’s significant Social Security cost-of-living adjustment is the first time in more than a decade that Medicare premiums have not increased and shows that we can provide more support to older Americans who rely on the benefits they have earned”, said Social Security Administration Acting Commissioner Kilolo Kijakazi.
President Joe Biden on Thursday afternoon echoed sentiment that cutting Medicare premiums would impact the pocketbooks of retirees. “Seniors will outpace inflation next year,” Biden said. “For the first time in 10 years, their Social Security checks will go up while their health insurance premiums will go down.”
Jo Ann Jenkins, CEO of AARP, said the benefits are increasing “will bring much-needed relief to millions of Americans.”
Several government indices show that inflation is hitting older Americans harder than the rest of the population. Medical costs represent a significant part of the burden.
The Social Security announcement comes just weeks before the midterm elections, and at a time when Democrats and Republicans are currently clashing over high prices and how best to financially shore up the program in the future. coming.
William Arnone, chief executive of the National Academy of Social Insurance, a Social Security advocacy organization, said the benefit increase is “no reason to rejoice” because it will not help all beneficiaries overcome inflation, especially if prices continue to rise.
“There are already indications that health care inflation will explode next year,” said Arnone.
Margaret Toman, a 78-year-old woman in Garner, North Carolina, who had stopped working to care for her late mother, described the 8.7% increase as “pretty stingy.”
“I think most of us who are older and on social security are grateful for that social security,” she says. “But that gratitude sometimes hides or replaces a certain sense of anger at having contributed to a system for so long and still struggling to survive.”
Around 70 million people, including pensioners, people with disabilities and children, receive social security benefits. It will be the largest increase in benefits baby boomers, those born between 1946 and 1964, have ever seen. The last time a COLA was higher was in 1981, at 11.2%.
Willie Clark, 65, of Waukegan, Illinois, says his budget is “really tight” and increasing his Social Security disability benefits could give him some leeway to cover household expenses he’s been putting off.
Yet he doubts how much extra money will end up in his pocket. His rent in a building subsidized by the US Department of Housing and Urban Development is based on his income, so he expects that to rise as well.
Social security is financed by social charges levied on workers and their employers. The maximum amount of income subject to Social Security payroll taxes for 2023 is $160,200, up from $147,000 in 2022.
The funding configuration dates back to the 1930s, the brainchild of President Franklin D. Roosevelt, who believed that a payroll tax would foster a sense of belonging among average Americans that would shield the program from political interference.
Next year’s higher payment, without a concomitant increase in social security contributions, could put additional pressure on a system facing a serious deficit in the years to come.
The Social Security and Medicare trustees’ annual report released in June says the program’s trust fund will not be able to pay full benefits from 2035.
If the trust fund is exhausted, the government will only be able to pay 80% of the planned benefits, according to the report. Medicare will be able to pay 90% of the total scheduled benefits if the fund is exhausted.
In January, a Pew Research Center poll showed that 57% of American adults said that “take steps to make the social security system financially sound” was a top priority for the President and Congress this year. Securing Social Security has won bipartisan support, with 56% of Democrats and 58% of Republicans calling it a top priority.
Some solutions to reform Social Security were proposed, but none advanced in a strongly partisan Congress.
House Speaker Nancy Pelosi said Thursday that the COLA announcement is a reminder that “Extreme MAGA Republicans are openly plotting new schemes to cut seniors’ benefits and drive up their costs – including threatening economic disaster by holding the debt ceiling hostage for their toxic agenda.”
Earlier this year, Sen. Rick Scott, R-Fla., released a blueprint that would require Congress to present a proposal to adequately fund Social Security and Medicare or possibly phase them out.
Senate Minority Leader Mitch McConnell, R-Ky., publicly chastised the plan, and Biden used Scott’s proposal as a political bludgeon against Republicans ahead of the midterm elections.
“If Republicans in Congress are successful, seniors will pay more for prescription drugs and their Social Security benefits will never be secure,” said White House press secretary Karine Jean-Pierre.
Claire Savage in Chicago and Hannah Schoenbaum in Raleigh, North Carolina contributed to this report.