A historic 8.7% increase in cost-of-living adjustment will provide millions of Social Security recipients to receive more benefits in 2023, the largest in more than four decades.
However, the historic increase is expected to be eaten up in part by the rising cost of everyday living due to the economic situation. The benefits raise will equal roughly $140 extra per month starting in January for the average recipient. Said the Social Security Administration on Thursday.
Social Security Benefits Increase
While recipients of the benefits welcomed the increase, many people said that it was not enough to cover the impacts of inflation. A resident from Chatham on Chicago's South Side, 85-year-old Shirley Parker, said that the benefits increase was "not much help."
She said that home maintenance costs and high grocery prices were big factors that cut into her budget. Parker noted that food is "ridiculous," saying that she came out with a bag full of groceries, spent $50, and did not even have 10 items, as per the Associated Press.
On Thursday, a separate government report showed that inflation was accelerating and the Consumer Price Index rose 0.4% for September. This comes after just 0.1% in August and up 8.2% for the past 12 months. Furthermore, jobless claims for unemployment benefits rose for the week.
In an agency fact sheet, the Social Security Administration said the estimated average monthly Social Security benefit for all retired workers will be $1,827 beginning in January. The increase in benefits will also be coupled with a 3% drop in Medicare Part B premiums, which means that retirees will get the full impact of the Social Security increase.
According to CNN, Social Security and Medicare policy analyst at The Senior Citizens League, Mary Johnson, said that the question remains if the COLA will be enough to keep up with inflation. She noted that the answer would depend on what inflation is going to do from October onwards.
Combating High Inflation
The reduction in premiums is the first time in more than a decade that the tab will be lower than the year before. Johnson noted that this is a once-in-a-retirement event, having historically high COLA and reduced Part B premiums.
The drop in cost comes after a large spike in 2022 premiums, which raised the standard monthly premium to $170.10, up from last year's $148.50. The 2022 hike was, in part, due to a projected jump in spending because of a costly new drug that would treat Alzheimer's disease, Aduhelm.
However, because Aduhelm's manufacturer cut the price and the CMS limited coverage of the drug, this has changed the situation regarding premiums. Furthermore, spending was lower than projected on other Part B items and services, causing much larger reserves in the Part B trust fund, which allowed the agency to limit future premium increases.
While others are struggling, 73-year-old John Murray says that he is living comfortably on the $1,650 per month he gets from Social Security despite high inflation. He said that it was relatively easy to control costs when it is just one person to worry about, Marketplace reported.
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