Back in October, the Social Security Administration announced that recipients would receive an 8.7 percent cost-of-living-adjustment (COLA) raise in early 2023. That’s because the annual COLA adjustments are pegged to inflation, and inflation was very high in 2022. Therefore, 70 million Americans will receive that raise.
That increase is the largest in 40 years, while the average benefit for retirees will rise by $146 per month.
“Federal benefit rates increase when the cost of living rises, as measured by the Department of Labor’s Consumer Price Index (CPI-W). The CPI-W rises when inflation increases, leading to a higher cost of living. This change means prices for goods and services, on average, are higher. The cost-of-living adjustment (COLA) helps to offset these costs,” SSA said in a recent blog post.
When will the new payments go out?
If the recipient’s birthday falls between the 1st and 10th of the month, they will receive it on the second Wednesday of the month. For birthdays between the 11th and 20th, they will get it on the third Wednesday of the month. And for those with birthdays the rest of the month, the payments will arrive on the fourth Wednesday of the month.
The other big question is whether the COLA adjustments will actually be enough to overcome rising inflation.
The Senior Citizens League has been sounding the alarm about that for much of the last two years.
“High inflation has caused Social Security benefits to lose 40 percent of their buying power since the year 2000,” the League said in May.
“That’s the deepest loss in buying power since the beginning of this study by The Senior Citizens League in 2010,” Mary Johnson, a Social Security policy analyst for The Senior Citizens League, said in May.
Even after the COLA increase was announced, there were numerous warnings that the increase wouldn’t be enough to keep up with inflation. A Motley Fool survey found that more than half of retired Americans didn’t see the 8.7 percent increase as enough.
However, there is some good news for recipients: There are clear signs that inflation is beginning to abate.
“In fact, if inflation levels continue to shrink, seniors on Social Security might have an opportunity to not only gain buying power but actually shore up their finances by putting some money away into savings. That’s something a lot of beneficiaries no doubt found impossible this year,” a Lincoln Journal Star analysis this week said.
One thing that’s even more uncertain is the prospect of Social Security reform.
According to this year’s report, the main trust fund that funds Social Security will lose the ability to pay out full benefits in 2034.
“The Old-Age and Survivors Insurance (OASI) Trust Fund, which pays retirement and survivors benefits, will be able to pay scheduled benefits on a timely basis until 2034, one year later than reported last year. At that time, the fund’s reserves will become depleted and continuing tax income will be sufficient to pay 77 percent of scheduled benefits,” SSA said.
That is unless Congress takes action to change the formula that funds the program, or some other type of change. There were several proposals in the current Congress to reform Social Security, including Rep. John Larson’s Social Security 2100 proposal, although it appears highly unlikely that any of those reforms will be enacted in the remaining two weeks of this Congress. And with a divided Congress set to take office in January, the possibility of reform is even more unlikely, unless a bipartisan grand bargain can be struck.
Social Security emerged as a salient political issue in the 2022 midterm elections, in a way that it hadn’t in quite some time. Some Republican candidates made noises about possibly changing how Social Security is funded, while Democrats, including President Biden, ran on protecting Social Security, while not proposing any specific reforms.
Stephen Silver is a Senior Editor for 19FortyFive. He is an award-winning journalist, essayist and film critic, who is also a contributor to the Philadelphia Inquirer, the Jewish Telegraphic Agency, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.
