Hot off the press: The government announced yesterday that Social Security benefits will increase by 8.7% at the start of 2023.
The Answer Everyone’s Been Waiting For
Many senior citizens have been patiently waiting for the U.S. Bureau of Labor Statistics, BLS, to release the September data to confirm the increase in benefits this January. Yesterday the BLS confirmed an 8.7% increase in benefits starting in January 2023.
This is the highest COLA since 1981, when it was 11.2%. You can see the history of COLA increases here.
The Social Security Administration (SSA) adjusts benefit amounts annually to account for inflation through a cost-of-living adjustment (COLA).
Mary Johnson, a Social Security and Medicare policy analyst for The Senior Citizens League, said that the rise of 8.7% is rare and “This may be the first and possibly the last time that beneficiaries today receive a COLA this high.”
A statement by the Social Security Administration on the Cost-of-Living-Adjustment (COLA) says:
“Since 1975, Social Security’s general benefit increases have been based on increases in the cost of living, as measured by the Consumer Price Index. We call such increases Cost-Of-Living Adjustments, or COLAs. We determined an 8.7-percent COLA on October 13, 2022. We will announce the next COLA in October 2023.”
The raise in benefits will help retirees by increasing their monthly benefits by about $146.00 a month, about $1,752 a year.
SSA will mail COLA notices during the month of December 2022 to retirement, survivors and disability beneficiaries, SSI recipients, and representative payees. Those who want to know their benefit amount sooner can find their COLA notice online using the Message Center in their personal my Social Security account.
Inflation Threatens Survival of Social Security
The Social Security payroll tax is the most significant tax most US workers must pay. One issue with the survival of Social Security is that wages aren’t keeping up.
The Bureau of Labor Statistics reported that inflation-adjusted weekly earnings fell by 3.8% within the last year. Experts say that higher benefits coupled with lower tax revenues are not a good formula, especially when the benefits already face a $20 trillion long-term funding deficit – what lawmakers should be paying more attention to.
Many in Congress argue that we should increase taxes to make Social Security solvent and boost benefits across the board. But the maximum Social Security benefit paid next year will top $43,000 for retirees age 67, and a high-earning couple would retire on more than $80,000 in Social Security benefits.
One way to raise the Social Security solvent is to raise the 12.4% payroll tax rate, increase the maximum taxed earnings, raise the retirement age, and reduce COLAs, means-testing benefits for the rich.
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