American Senior citizens and other Social Security recipients will start getting a bigger monthly benefit next month due to an 8.7% annual cost-of-living adjustment aimed at supporting them cope with high inflation.
The increase, the biggest in more than 40 years, will raise retirees’ monthly payments by more than $140 to an estimated average of $1,827 for 2023.
The adjustment is the highest that most current beneficiaries have ever seen because it is based on an inflation metric from August through October, which was also around 40-year highs. Inflation has cooled somewhat since then, though prices remain elevated.
“I’m sure everyone is anxiously awaiting because prices are still high,” said Mary Johnson, a Social Security and Medicare policy analyst at The Senior Citizens League, an advocacy group. “Just shopping for food to feed people during the holidays is going to be a huge challenge.”
Roughly 70 million people will receive the increase, which follows a 5.9% adjustment for 2022.
Many senior citizens depend heavily on Social Security. According to the Social Security Administration, some 42% of older women and 37% of older men rely on monthly payments for at least half of their income.
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Even though recipients received a sizable adjustment for this year, inflation ate away at the boost.
Johnson said that the increase fell short of actual inflation by an average of more than $42 – or 46% – every month or roughly $508 for the year.
Many retirees have been forced to turn to their savings or public assistance. One-third of seniors reported signing up for food stamps or visiting a food pantry over the past 12 months, compared with 22% in 2020, according to recent surveys by The Senior Citizens League. Also, 17% have applied for assistance with heating costs, compared with 10% in 2020.
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This is not a new problem. Benefits have not kept up with the rising cost of living for years, even with the annual adjustments.
As of March, inflation has caused Social Security payments to lose 40% of their buying power since 2000, according to a study released earlier this year by the league. Monthly benefits would have to increase by $540 to maintain the same level of buying power as in 2000.
Medicare premiums will decrease.
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Senior citizens will also see their Medicare Part B premiums drop in 2023, the first time in more than a decade that the tab will be lower than the year before, the Centers for Medicare and Medicaid Services announced in the fall. It’s only the fourth time premiums have declined since Medicare was created in 1965.
The standard monthly premiums will be $164.90 in 2023, a decrease of $5.20 from 2022.
Also, spending was lower than projected on other Part B items and services, which resulted in much larger reserves in the Part B trust fund, allowing the agency to limit future premium increases.
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