Millions of Social Security recipients will get an 8.7% increase in their benefits in 2023.
It’s a historic increase and good news for American retirees and others – but it’s tempered by the fact that it’s fueled by high inflation that has raised the cost of daily living.
The cost-of-living adjustment means the average recipient will receive more than an additional $140 a month starting in January, according to estimates released Thursday by the Social Security Administration.
The increase in benefits. the largest in 40 years, will be coupled with a 3% drop in Medicare Part B premiums, meaning retirees will fully benefit from increased Social Security benefits.
“This year’s significant Social Security cost-of-living adjustment is the first time in more than a decade that Medicare premiums aren’t rising and shows we can provide more support to older Americans who matter. on the benefits they’ve earned,” Social Security said. Acting Commissioner of Administration Kilolo Kijakaz.
However, a separate government report showed a further acceleration in inflation, a trend that is eating away at Social Security gains for the elderly. The consumer price index rose 0.4% in September after just 0.1% in August and rose 8.2% over the past 12 months. Jobless claims increased over the week.
Stock prices fell sharply as Wall Street opened.
The Social Security announcement came just weeks before the midterm elections, and at a time when Democrats and Republicans are currently clashing over high prices and how best to financially shore up the program in the first place. ‘coming.
President Joe Biden has pledged to protect both Social Security and Medicare. “I will make them stronger,” he said last month. “And I’ll lower your costs so I can keep them.”
About 70 million people – including pensioners, people with disabilities and children – receive social security benefits. It will be the largest increase in benefits baby boomers, those born between 1946 and 1964, have ever seen.
Willie Clark, 65, of Waukegan, Illinois, says his budget is ‘really tight’ and increasing his Social Security disability benefits could give him some breathing room to cover the cost of household expenses which he retained.
Yet he doubts how much extra money will end up in his pocket. His rent in a building subsidized by the US Department of Housing and Urban Development is based on his income, so he expects that to rise as well.
Social security is financed by social charges levied on workers and their employers. The maximum amount of earnings subject to Social Security payroll taxes for 2023 is $160,200.
The funding configuration dates back to the 1930s, the brainchild of President Franklin D. Roosevelt, who believed that a payroll tax would foster a sense of belonging among average Americans that would shield the program from political interference.
Next year’s higher payment, without a concomitant increase in social security contributions, could put additional pressure on a system facing a serious deficit in the years to come.
The Social Security and Medicare trustees’ annual report released in June says the program’s trust fund will not be able to pay full benefits from 2035.
If the trust fund is exhausted, the government will only be able to pay 80% of the planned benefits, according to the report. Medicare will be able to pay 90% of the total scheduled benefits if the fund is exhausted.
In January, a Pew Research Center poll showed that 57% of American adults said “taking steps to make the Social Security system financially sound” was a top priority for the president and Congress this year. Securing Social Security has won bipartisan support, with 56% of Democrats and 58% of Republicans calling it a top priority.
Some solutions to reforming Social Security have been proposed — but none have advanced in a heavily partisan Congress.
Earlier this year, Sen. Rick Scott, R-Fla., released a blueprint that would require Congress to introduce a proposal to adequately fund Social Security and Medicare or possibly phase them out.
Senate Minority Leader Mitch McConnell, R-Ky., publicly chastised the plan, and Biden used Scott’s proposal as a political bludgeon against Republicans ahead of the midterm elections.
“If Republicans in Congress are successful, seniors will pay more for prescription drugs and their Social Security benefits will never be secure,” Jean-Pierre said.
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