Social Security Recipients Set to Receive Major Increase in Monthly Benefits

Social Security recipients struggling with higher inflation in the United States are likely to get a major boost in their monthly benefits starting next year, according to NBC News.

According to a new estimate from the Senior Citizens League, a nonprofit advocacy group, Social Security beneficiaries could receive as much as $159 extra per month in 2023 thanks to the high inflation reading for July.

The annual cost of living adjustment (COLA) formula of the Social Security Administration is based on inflation readings for the months of July, August, and September. Even if inflation rates peaked in July, the readings for the next two months are still likely to be significantly higher compared to years past, given that consumer prices have remained at 40-year highs for most of the year 2022.

Social Security benefits to receive biggest boost since 1981

Mary Johnson, who is the policy analyst and editor at the Senior Citizens League, said that she is currently projecting an annual adjustment of 9.6 percent, which would be the biggest boost to Social Security benefits since 1981.

Johnson said that is really phenomenal as no one receiving Social Security at the moment will have received a COLA this high. A 9.6 percent adjustment would compare with an increase of 5.9 percent last year, which equated to a monthly average earnings bump of $92.30.

She added that people on fixed incomes have been among those most impacted by the 40-year-high inflation rates, meaning benefit payments have not kept pace with rising prices this year. For instance, the Senior Citizens League estimates that, based on the inflation rate in the U.S. through July, a monthly Social Security benefit worth $1,656 is about $58 less than it should be per month, on average.

Johnson said the coming increase will still fall short of what recipients need to catch up with price increases on food and other consumer goods for most beneficiaries. Already, 37 percent of participants surveyed by the Senior Citizens League said they received low-income assistance in the year 2021. That is more than double the 16 percent who were receiving needs-based assistance before the COVID pandemic started.

Johnson said that Social Security was never designed to be a sole source of income for people. The Social Security Administration is expected to announce the 2023 cost of living adjustment in October after the consumer price index data for the month of September is released.

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Inflation pressures ease a bit in July

According to CNBC, prices that American consumers pay for a variety of goods and services rose 8.5 percent in July from a year ago, a slowing pace from the previous month due largely to a drop in gas prices.

According to the Bureau of Labor Statistics, the consumer price index was flat as energy prices broadly declined 4.6 percent and gasoline fell 7.7 percent on a monthly basis. That offset a 1.1 percent monthly gain in food prices and a 0.5 percent increase in shelter costs.

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