Some good news for seniors and others receiving Social Security: Next year’s cost of living adjustment will be 8.7%, the biggest increase in 40 years thanks to sky-high inflation.
Social Security Administration announced a fifth increase after September inflation figures have been released. The increase was expected, but will still be welcomed by more than 70 million people people who receive Social Security payments each month.
It’s not just seniors — disabled adults will also get a boost, as will insured workers and low-income survivors receiving Supplemental Security Income. supplement (SSI).
This is a big change from COLA over the past decade. In 2021, COLA is 1.3% and in 2020, 1.6%. You have to go back to July 1981 — the last time the United States experienced high inflation — to COLA over 8% (that year it was 11.2%).
But the adjustment is based on inflation numbers from July, August and September of the previous year. So seniors and other recipients who have struggled against the constantly rising prices of food, housing and other essentials will get some relief next year.
“Recipients are making up for some lost points in purchasing power following last year’s 5.9% gain, which is very low relative to recent inflation rates,” said Mark Hamrick., Senior economic analyst at Bankrate. “Due to soaring costs of food, home heating, and healthcare/prescription drugs, many people’s budgets are likely to remain constrained next year.”
Thursday’s announcement will add about $140 to retirees’ monthly checks on average, with the Social Security Administration estimating that the average retiree will receive $1,827 a month by 2023. Beneficiaries who are disabled will get $1,483 . on average.
More than 65 million Social Security beneficiaries will see COLAs reflected in their checks starting January. About 7 million SSI beneficiaries will be increased for the first time on December 30, 2022, according to the Social Security Administration.
More good news for retirees? Medicare Part B premium, deducted from Social Security benefits, will decrease next yeargiving subscribers more breathing space.
One thing to watch: Your tax bill. Social Security benefits are subject to income tax, depending on your tax status and other income. More information about the possibility of a tax increase here.
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