Millions of citizens – mostly retired or disabled – in the U.S. who have particular trouble coping with rapidly growing living expenses will be relieved to hear that the Social Security Administration (SSA) is scheduled to announce the largest cost-of-living increase in four decades on Thursday. Over 70 million Americans will get a sizable benefit increase next year, likely the largest in around 40 years.
The cost-of-living adjustment for 2023 is predicted to be roughly 8.7%. When the Fed releases the inflation data for September on Thursday, the final COLA (Cost-of-Living Adjustment) will be made public. There is also good news for Medicare insurance beneficiaries to look forward to: there will be a decrease in the typical Part B premium withholding.
Although most Americans associate Social Security with retirement, The SSA (Social Security Administration) plays a more prominent role in ensuring financial security than one would assume.
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Before getting into more of the finer details, it’s important to point out that it has been since 1975 that the yearly inflation adjustment has been provided, according to a formula set forth by Congress. There is no disagreement among policy experts about the significance of the COLA in assisting beneficiaries in keeping up with prices. Some disagree on whether the existing formula adequately estimates the inflation that impacts retirees. So, in other words, we all seem to agree that those in need of Social Security income are welcome to it; it’s just a matter of asking oneself, “how much does each person get, considering how crappy our economy is?”
Last month, advocates predicted that the COLA may reach 8.7% by 2023. That would make it the greatest rise in about 40 years, surpassing this year’s yearly cost-of-living adjustment of 5.9%. According to Mary Johnson, a policy analyst, “these are just estimates,” so one should remember that the actual adjustment for 2023 might be greater or lower than predicted.
The Senior Citizens League predicted that benefits would rise by 10.5% in 2023 until the most recent August numbers influenced the drop to 8.7%. The projections are based on data from the CPI-W, or the Consumer Price Index for Urban Wage Earners & Clerical Workers, a subset of the CPI. The SSA uses this data yearly to determine the COLA, which affects both Social Security and Supplemental Security Income benefits. The SSA determines the annual adjustment by comparing the CPI-W percentage from the previous year’s third quarter to the current year’s third quarter.
Those who receive Social Security income get an average monthly payout of $1,656. According to bipartisan advocacy groups, the latest COLA adjustment would raise the amount to $144.10. The COLA increase will impact one in five U.S. family budgets, and around 25% of Americans receive SSI (Social Security Income), so it might substantially affect the economy.
It will be especially crucial for those who rely on Social Security each month. One-fourth of older citizens in America get all or most of their income from their monthly social security checks. The increase comes as Americans’ wallets are being squeezed by inflation, affecting the price of holiday travel and food.
When price rises are brought on by inflation, annual increases assist recipients in holding onto their purchasing power. They are long-lasting and will progressively raise revenues throughout a person’s retirement period. However, it’s unclear if an additional $144.10 a month would boost spending power, given that a sizable portion of the benefits people receive is used to pay for housing and health care, two industries that have suffered market downturns and price hikes.
Anyone who receives Social Security income can estimate how much extra they’ll get by multiplying their monthly payment by 0.087, or 8.7%. This is, of course, what’s currently estimated. We’ll know for sure when it is announced Thursday, September 13th, along with the Federal Reserve’s latest inflation data.
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