Social Security gets 8.7% cost-of-living increase — highest since 1981

Social Security recipients will receive the sharpest increase to their benefits in four decades next year in an effort to offset the effects of inflation, the feds said Thursday.

Social Security benefits will increase 8.7% in 2023 for approximately 70 million eligible Americans, the Social Security Administration announced.

In 2022, the government will send out more than $1 trillion to 52.5 million Americans over 65 and nearly 18 million others who qualify for benefits — such as survivors of insured workers and those on disability, according to the federal agency.

The 8.7% increase for 2023 will cost taxpayers around $100 billion.

The cost-of-living adjustment is the most recipients have received since 1981, when benefits were boosted 11.2%.

Beginning in January, the average retiree will receive $1,827 in monthly Social Security benefits after the cost-of-living adjustment. That figure marks an increase of $146 per month compared to the old average of $1,681 in 2022.

The boost was announced on the same day that the latest federal inflation report showed prices increased by a higher-than-expected 8.2% in September. High inflation has eroded the buying power of American households, who face steeper prices for daily necessities such as food, rent and electricity.

Aside from the boost to benefits, Social Security recipients will see a 3% drop in Medicare Part B premiums, which are tied to doctor visits and hospital outpatient services.

“Medicare premiums are going down and Social Security benefits are going up in 2023, which will give seniors more peace of mind and breathing room,” the Social Security Administration’s acting commissioner Kilolo Kijakazi said in a statement.

“This year’s substantial Social Security cost-of-living adjustment is the first time in over a decade that Medicare premiums are not rising and shows that we can provide more support to older Americans who count on the benefits they have earned,” Kijakazi added.

AARP spokesman Colby Nelson praised the changes and noted the increased monthly benefits will “provide much needed relief to millions of Americans.”

An increase of this size is “rare,” according to analysts from the advocacy group Senior Citizens League – which urged older Americans to “enjoy it now.”

“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 analysts said.

Social Security recipients “are making up for some lost ground” after an adjustment of just 5.9% last year, according to Mark Hamrick, senior economic analyst at Bankrate.

However, the sharp increase in benefits could have future consequences, given the strained state of Social Security and mounting fears that the benefit will run out of funding in the near future.

“A potential downside of the large COLA increase is that it raises the risk that funding is further depleted for future Social Security benefits,” Hamrick said. “That’s aside from the potentially damaging impacts on funding from a rise in unemployment which is widely expected.”

With Post wires