People receiving social security benefits, including seniors, widowers, and those with disabilities, will see the largest increase in monthly payments in more than 40 years starting next year.
The Social Security Administration (SSA) announced last week a boost of 8.7% in benefits.
The Cost-of-Living-Adjustment (COLA) increase will raise the payouts by more than $140 per month, from $1,681 to $1,827, according to a fact sheet released by the SSA.
Social security benefits are going up due to increases in the cost of living on account of skyrocketing inflation which has driven up the prices of groceries and travel, among other things.
Adjustments are determined by the Consumer Price Index for Urban Wage Earners and Clerical Workers. It also corresponds with index increases from the previous year, aligning with the quarter for the following year.
The Social Security Administration has made annual adjustments since 1975.
Medicare Part B premiums are also decreasing starting next year, potentially allowing the social security payouts to go further.
Although the increase could potentially benefit many people, it reportedly could also have an adverse effect for some.
The Senior Citizens League said federal income liability (the amount of tax a person owes to the federal government on his annual earned income) has increased along with the COLA benefits, possibly canceling any advantages to the increased benefits.
In addition, welfare programs such as SNAP (Supplemental Nutrition Assistance Program) could be harder to get for some people with the increase. In Texas, $1,775 is the income limit for individuals, while the social security check will increase to $1,827.
The increase is smaller than what the Senior Citizens League predicted a month ago, reports The Hill, which forecasted a 9.6% increase.
Furthermore, the increase in payouts could expedite the already dwindling funds to pay out social security benefits.
Prior to the COLA hike, the SSA was “projected to run out of money to pay scheduled benefits in 2034,” according to the Heritage Foundation.
While the elevated monthly payments will likely be a welcome change for recipients, the long-term financial solvency of the program continues to struggle with rising costs.