CNN
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Seniors and other Social Security recipients will begin receiving a heftier monthly benefit next month due to a 8.7% annual cost of living adjustment to help them cope high inflation.
The increase, the largest in more than 40 years, will increase retiree monthly payments by more than $140 to an estimated average of $1,827 for 2023.
The adjustment is the largest most current beneficiaries have ever seen, as it is based on a measure of inflation from August to October, which was also around 40 years old.. Inflation has kinda cool Since then, although prices remain high.
“I’m sure everyone is looking forward to it because the prices are still high,” said Mary Johnson, a Social Security and Medicare policy analyst at the Senior Citizens League, an advocacy group. “Just buying food to feed people over the holidays is going to be a huge challenge.”
About 70 million people will benefit from the increase, which follows a 5.9% adjustment for 2022.
Many seniors are heavily dependent on Social Security. Some 42% of senior women and 37% of senior men depend on monthly payments for at least half of their income, according to the Social Security Administration.
Exactly when the boosted payment will arrive depends on the recipients’ age and date of birth. Those who received social security before May 1997 receive their monthly allowance on the 3rd of each month. For more recent retirees, those with birth dates from the 1st to the 10th of the month receive it on the second Wednesday, while those born from the 11th to 20th and 21st to 31st of the month are paid on the third and fourth Wednesdays, respectively. .
Even though recipients received a significant adjustment for this year, inflation eroded the boost.
The increase is less than actual inflation by more than $42 on average — or 46% — each month, or about $508 for the year, Johnson said.
Many retirees have been forced to turn to their savings or public assistance. A third of seniors said they had taken out food stamps or visited a food pantry in the past 12 months, up from 22% in 2020, according to recent surveys by the Senior Citizens League. Also, 17% requested assistance with heating costs, compared to 10% in 2020.
This is not a new problem. Benefits have not kept up with the rising cost of living for years, even with the annual adjustments.
In March, inflation caused Social Security payments to lose 40% of their purchasing 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 purchasing power as in 2000.
Seniors will also see their Lower Medicare Part B premiums in 2023, the first time in more than a decade that the tab will be lower than the previous year, the Centers for Medicare and Medicaid Services announced in the fall. This is only the fourth time premiums have fallen since Medicare was established in 1965.
Standard monthly premiums will be $164.90 in 2023, a decrease of $5.20 from 2022.
Reduction comes later a sharp increase in premiums in 2022, which raised the standard monthly premium to $170.10 from $148.50 in 2021. A key driver of the 2022 rise was an expected increase in spending due to an expensive new drug for the disease of Alzheimer, Aduhelm. However, since then the manufacturer of Aduhelm has reduced the price and the Centers for Medicare and Medicaid Services limited coverage of the drug.
In addition, expenditures were lower than planned for other Part B items and services, resulting in much larger reserves in the Part B trust fund, allowing the agency to limit future premium increases.
The big annual adjustment could end up hurting some seniors, Johnson said.
For example, the resulting increase in income could push them above thresholds for certain government benefits, such as Medicare Extra Help, Medicaid, food stamps, and housing assistance, leaving people eligible for less or no help. Or they might have to pay more for their Medicare Part B premiums, which are adjusted for income.
Also, they might have to start paying taxes — or owing higher lives — on their Social Security benefits if their income exceeds a certain level.
In addition, the increase could leave Social Security finances on even more shaky ground. Combined trust funds that pay benefits to retirees, survivors and disabled will be impoverished by 2035 and only able to distribute about three-quarters of promised payments unless Congress fixes the program’s long-term funding shortfall, according to the latest report from Social Security administrators.
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