Senior citizens and other Social Security recipients will start receiving higher monthly benefits next month due to an 8.7% annual cost-of-living adjustment aimed at helping combat high inflation.
The largest increase in more than 40 years would increase retirees’ monthly payments by more than $140 to an estimated average of $1,827 by 2023.
The adjustment is the highest most current beneficiaries have ever seen, as it is based on inflation from August to October, which is the highest level in 40 years.. Inflation has cooled somewhat since then, although prices remain high.
“I’m sure everyone’s looking forward to it because the prices are still high,” said Mary Johnson, social security and health policy analyst at the League of Senior Citizens. “Just getting food to feed people during the holidays is going to be a big challenge.”
After the 5.9% adjustment for 2022, about 70 million people will get a raise.
Many senior citizens are heavily dependent on Social Security. According to the Social Security Administration, 42% of senior women and 37% of senior men rely on monthly payments for at least half of their income.
When the incremental payment arrives depends on the recipients’ ages and dates of birth. Persons who received social security before May 1997 receive their monthly benefits on the 3rd of every month. For newer retirees, those born between the 1st and 10th of the month are paid on the second Wednesday, and those born between the 11th and 20th and the 21st and 31st are paid on the third and fourth Wednesday respectively. .
Although buyers received a significant adjustment for this year, inflation provided the impetus.
Johnson said the increase has lagged actual inflation by an average of $42 each month, or 46 percent, or about $508 over the year.
Many retirees have had to turn to their savings or government assistance. A third of seniors reported registering for food stamps or visiting a food pantry in the past 12 months, up from 22% in 2020, according to recent surveys by the Senior Citizens League. Also, 17% applied for help with heating costs compared to 10% in 2020.
This is not a new problem. Benefits, even with annual adjustments, have not kept up with the rising cost of living for years.
As of March, inflation had caused Social Security payments to lose 40% of their purchasing power since 2000, according to a study released by the league earlier this year. To maintain purchasing power as it was in 2000, monthly benefits would need to increase by $540.
Senior citizens will see Medicare Part B premiums drop in 2023, the first time in more than a decade that the mark will be lower than the previous year, the Centers for Medicare and Medicaid Services announced in the fall. This is only the fourth time that premiums have fallen since Medicare was created in 1965.
Standard monthly premiums will decrease by $5.20 from 2022 to $164.90 in 2023.
The decrease follows a large increase in 2022 premiums that raised the standard monthly premium in 2021 from $148.50 to $170.10. The main reason for the 2022 increase was the projected increase in costs due to Aduhelm, an expensive new drug for Alzheimer’s disease. . However, since then, the manufacturer of Aduhelm has reduced the price and the Centers for Medicare and Medicaid Services has limited the drug’s coverage.
Also, spending was lower than projected for other Part B items and services, resulting in larger reserves in the Part B trust fund and allowing the agency to limit future premium increases.
The big annual adjustment could hurt some seniors, Johnson said.
For example, the resulting increase in income may put them above the threshold for certain government benefits, such as Medicare Extra Help, Medicaid, food stamps, and rental assistance, leaving them with less or no assistance. Or they may have to pay more for income-adjusted Medicare Part B premiums.
In addition, if their income rises above a certain level, they may have to start paying taxes on Social Security benefits or owe higher fees.
In addition, the increase could further undermine Social Security’s finances. The combined trust funds that pay benefits to retirees, survivors and the disabled will run out by 2035, and will be able to distribute about three-quarters of the promised payments unless Congress addresses the program’s long-term funding shortfall. ‘ report.