By Fatima Hussain (Associated Press)
Washington (AFP) – Millions of Social Security recipients will receive an 8.7% increase in their benefits in 2023, a historic increase, but a gain that will be partially wiped out by the rising cost of daily living.
The Social Security Administration said Thursday that the cost-of-living adjustment — the largest in more than 40 years — means the average recipient will receive an extra $140 a month starting in January.
While Social Security recipients welcomed the increased benefits, many said they were not enough to cover the impact of inflation.
It’s not a big help,” said 85-year-old Shirley Parker, who lives in Chatham on Chicago’s South Side.
Home maintenance costs and high grocery prices severely reduce her budget. “Food is silly. I walked out with a bag full of groceries—$50—I don’t have about 10 items,” she said.
The Social Security Act (COLA) was created to help seniors and other beneficiaries manage the high cost of food, fuel, and other goods and services. How well it performs depends on what inflation does in the future.
In fact, a separate government report Thursday showed inflation recently accelerating. The CPI rose 0.4 percent for the month of September after just 0.1 percent in August and an increase of 8.2 percent in the past 12 months. Jobless claims increased during the week.
The stock market opened lower.
The Social Security Administration said the estimated average monthly Social Security benefit for all retired workers would be $1,827 starting in January, according to the agency’s fact sheet.
The increase in Social Security benefits will be coupled with a 3% decrease in Medicare Part B premiums, meaning retirees will get the full effect of the Social Security increase.
“This year’s Social Security cost-of-living adjustment is the first time in more than a decade that health insurance premiums have not gone up and shows we can provide more support for older Americans who rely on their benefits,” Social Security said. Management Kilolo Kigakazi.
Colby Nelson, a spokesman for the Association of American Retirees, said the benefits increase “will provide much-needed relief to millions of Americans.” He described the annual increase in the cost of living as “more important than ever because high inflation remains a problem for older Americans.”
Several government indicators show that inflation affects older Americans more than the rest of the population. Medical costs are a large part of the burden.
The Social Security announcement comes just weeks before the midterm elections, and at a time when Democrats and Republicans are arguing about higher rates now and how best to financially support the program in the future.
President Joe Biden has pledged to protect Social Security and Medicare. “I will make them stronger,” he said last month. “And I’ll lower your cost so I can keep it.”
About 70 million people — including retirees, the disabled, and children — receive Social Security benefits. This would be the largest increase in benefits experienced by those born between 1946 and 1964. The last time COLA was higher was in 1981, at 11.2%.
Willie Clark, 65, of Waukegan, Illinois, says his budget is “very tight” and an increase in his Social Security disability benefit could give him breathing room to cover the cost of household expenses he’s been putting off.
However, he doubts how much extra money will end up in his pocket. His rent in a US Department of Housing and Urban Development subsidized apartment building depends on his income, so he expects that to rise as well.
Social Security is funded by payroll taxes collected from workers and their employers. The maximum amount of earnings subject to Social Security payroll taxes for 2023 is $160,200.
The funding setup dates back to the 1930s and is the brainchild of President Franklin D. Roosevelt, who believed that a payroll tax would foster in ordinary Americans a sense of ownership that would protect the program from political interference.
Higher payments next year, without a concomitant increase in Social Security contributions, could put additional pressure on a system facing severe deficits in the coming years.
The annual Social Security and Medicare Trustees report released in June says the trust fund for the program will not be able to pay full benefits starting in 2035.
If the trust fund runs out, the government will be able to pay only 80% of the planned benefits, the report said. Medicare will be able to pay 90% of the total assessed benefits if the fund runs out.
In January, a Pew Research Center survey found that 57% of US adults say “taking steps to make the Social Security system financially sound” was a top priority for the president and Congress to address them this year. Social Security insurance had bipartisan support, with 56% of Democrats and 58% of Republicans calling it a top priority.
Some solutions for Social Security reform have been proposed — but none have moved forward in the sharply partisan Congress.
Earlier this year, Senator Rick Scott, R-Fla., released a detailed plan that would require Congress to come up with a proposal to adequately fund Social Security and Medicare or perhaps phase it out.
Senate Minority Leader Mitch McConnell, a Republican from Kentucky, publicly rebuked the plan and used Biden’s Scott proposal as a political hit against Republicans ahead of the midterm elections.
“If the Republicans in Congress get what they want, seniors will pay more for prescription drugs, and their Social Security benefits will never be safe,” Jean-Pierre said.
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Claire Savage in Chicago contributed to this report.
Originally published at San Jose News Bulletin
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