The Social Security administration will impose the highest increase in the cost-of-living adjustment (COLA) so far. According to CNBC, an 8.7% boost will be granted to the beneficiaries by 2023, as the independent agency announced this week.
COLA to Skyrocket in 2023 Amid Inflation
Although global inflation remains a huge threat to the economy of many countries, the Social Security Administration of the United States expects an almost 9% boost in benefits for retirees by next year. In 40 years, it was considered the highest increase that happened.
The adjustments of the benefits started in 1975. At that time, the agency has been regularly changing it to match the cost of living of the residents.
For many years, multiple increases have been passed by the lawmaker. It matters the most for the retirees who will benefit from the money.
The 8.7% increase will mark the largest boost since 1981, when the increase reached 11.2%. However, a year before it happened, the boost hit 14.3% amid the deep recession in the country.
Following the Great Recession in 2008, no changes in COLA were made in the years 2009, 2010, and 2015.
Will it Be Enough For the Beneficiaries?
The COLA for this year reportedly reached 5.9%, which was lower compared to the upcoming increase. It took effect when the 9.1% inflation hit June.
"The 5.9% COLA received this year has fallen short on average by 50%. Without a COLA that adequately keeps pace with inflation, Social Security benefits purchase less over time, and that can create hardships -- especially as older Americans live longer lives in retirement," the nonprofit Senior Citizen League mentioned in a statement, as CNET reported.
The annual COLA is calculated through the CPI-W or Consumer Price Index for Urban Wage Earners and Clerical Workers. Experts said this is not an indicator to determine the economic needs of the beneficiaries.
According to Dan Adcock, the director of government relations and policy at the National Committee to Preserve Social Security and Medicare, the COLAs are not really "increases" for the benefit of the seniors. The money will sustain their living standard amid the rising prices of commodities and services.
How Much is the Benefit Check
Starting January 2023, the COLA increase will reflect on the benefit checks of the retirees. As early as December, the beneficiaries can now view the number of their checks that will come next year.
The size of the benefit checks will depend on two factors: taxes and Medicare Part B premiums. Next year, it is expected that the latter will be down from $170.10 to $164.90, which accounts for a $5.20 decrease.
If you want to have an idea of how much money you will receive in 2023, jot down your net Social Security benefit and add it to your Medicare premium. After that, multiply the result by the 2023 COLA.
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Written by Joseph Henry
