Social Security benefits will go up in 2023. The fact that a Cost of Living Adjustment is coming won't be a big surprise because the amount of paid benefits goes up in most years.
How much the annual raise is next year will be shocking, since it is relative to how much all current retirees have received over the years.
The image came from the same source as the one above.
Social Security raise will be announced in October of 2022, The raise will be the largest that seniors have seen in a long time.
The benefits increase could be as much as 10.8% according to a new analysis. A raise of this size would come as a huge shock to many seniors, given that the benefits increase was just 1.3% in 2021. Few of today's retirees are likely to remember the 11.2% raise retirees experienced back in 1981 as the last time benefits increased close to comparable.
There is no guarantee that the cost of living will be this large, as it is possible inflation will slow. The Social Security benefits increase would be well above what most current retirees have seen since they started getting benefits.
The unfortunate answer is that a huge increase in Social Security checks is necessary to ensure retirees are still able to maintain their standard of living.
Social Security's Cost of Living Adjustments are designed to keep benefits up to date with inflation. Each dollar buys less as the cost of goods increases. Since seniors won't increase their income by getting raises from their employers or finding new, better-paying jobs, their Social Security benefits must go up so they can afford to buy the same amount of goods and services.
The annual benefits increase is determined by changing the Consumer Price Index for Urban Wage Earners and Clerical Workers. Retirees are entitled to a benefits boost when costs increase in the third quarter of the year compared with the previous year.
Retirees won't have extra money because of this. If inflation continues to increase, they will buy the same amount of goods and services, but with larger checks. Retirees should be aware of the big raise that's coming so they aren't shocked by it, and should make sure to think about the impact of high inflation on their finances.
There's a disclosure policy at the Motley Fool.
All Rights Reserved © 2024
