More than 7 million Americans would begin receiving larger government benefits on Dec. 30 after rising inflation brought in a record-high 8.7 percent cost-of-living adjustment (COLA). million people receive benefits.
After the Social Security Administration (SSA) announced in early 2022 that the cost-of-living adjustment for 2023 would be the largest since the 1980s, Social Security and Supplemental Security Income (SSI) benefits were scheduled to increase by an average of about $140 per month . .
The 8.7 percent adjustment was due to decades of high inflation straining the budgets of American families.
Since Jan. 1, 2023 is a public holiday, individual SSI payments that millions of Americans must start receiving on Dec. 30 rose from a maximum of $841 a month last year to $914 a month in 2023 after the COLA hike. According to a fact sheet (pdf) published by the SSA.
Those receiving Social Security payments will receive their new, larger checks later in January.
In all, more than 65 million Americans will receive larger benefits in January, the SSA notes, adding that the fastest way for people to find out their new benefit amount is to log into their personal “my Social Security” account.
When do new checks arrive?
In January, beneficiaries will receive the new larger checks on one date – the second, third or fourth Wednesday, depending on their birthday.
People born between 1 and 10 will receive their new benefit checks on the second Wednesday of January.
Those born between the 11th and 20th will receive their first new check on the third Wednesday of January, while those born after the 21st will receive their larger check on the fourth Wednesday of the month.
The average monthly Social Security benefit for all retired workers is $1,827 after the 8.7 percent COLA increase, which is $146 higher than the pre-adjusted amount of $1,681 in 2022, according to SSA estimates.
The latest COLA adjustment came in response to rising inflation, which reached 9 percent in June before easing slightly over the summer.
The 8.7 percent increase is the largest increase since the SSA announced an 11.2 percent increase in 1981, which followed a 14.3 percent increase in 1980.
Last October, the SSA announced a 5.9 percent increase, the largest in nearly four decades.
Prior to this, due to the low level of inflation, the corrections were small.
“The worst is yet to come”
A long period of low inflation ended after COVID-19 hit, as the government and the Federal Reserve flooded shuttered businesses and households with trillions of dollars in stimulus and support.
While the money helped businesses boost workers’ wages and consumer spending, it led to an inflationary jump in demand as supply chains crippled by pandemic restrictions couldn’t keep up.
Idling factories couldn’t ramp up production fast enough to meet the jump in demand, inflationary dynamics were exacerbated by labor shortages as more people nearing retirement left the workforce permanently during the pandemic, and generous stimulus checks kept others from looking for work. .
US inflation, as measured by the Consumer Price Index (CPI), rose from a pandemic-era low of 0.24 percent in May 2020 to a recent peak of 9 percent in June 2022.
Amid rising inflation, central banks around the world have raised interest rates to cool demand and ease price pressures. This, in turn, caused economic slowdowns and increased the risk of recession.
In its latest two-year global economic forecast released in October, the International Monetary Fund (IMF) said it expected inflation to peak at the end of 2022, but warned that it would “remain high for longer than previously expected.”
Federal data shows that the latest CPI inflation rate from November 2022 was 7.11 percent year-over-year.
The IMF said it expects U.S. inflation to be 8.1 percent in 2022 and cool sharply to 3.5 percent in 2023.
At the same time, the IMF said in the report that it expects more economic pain, despite forecasts of low inflation.
“More than a third of the global economy will contract this year or next, while the three largest economies – the United States, the European Union and China – will continue to stagnate,” the IMF report said.
“In short, the worst is yet to come, and for many people, 2023 will feel like a recession.”