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If you’re on Social Security, you can expect your check to increase by 8.7% in January. That’s the biggest cost-of-living adjustment in four decades.
The Social Security Administration made the announcement Oct. 13, the same day new inflation numbers were released.
Here’s what that will look like for the average Social Security recipient:
- Retired workers will get an extra $147 a month on average, bringing the average monthly benefit to $1,827.
- Disabled workers will get an extra $119 a month on average, bringing the average monthly benefit to $1,483.
- The maximum Supplemental Security Income (SSI) benefit for individuals will increase by $73 a monthbringing the maximum monthly benefit to $914.
An 8.7% cost-of-living adjustment (COLA) sounds pretty generous, considering that Social Security benefits increased by 5.9% in 2022 — the largest boost in about 40 years.
But as prices for everything from groceries to housing skyrocket, will an extra $147 a month really be enough for the average retiree?
Why Is This Year’s COLA So High?
Social Security’s annual cost-of-living adjustment is tied to inflation. And inflation has been stubbornly high for over a year now.
The government uses the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, to measure inflation.
Each year, Social Security averages the CPI-W figures from the third quarter and compares it to the previous year’s figure.
Inflation has been at least 8.3% since July. That’s why this year’s Social Security COLA is so large: It needs to keep pace with inflation.
Why a 8.7% COLA Isn’t Great News
If you receive Social Security benefits, you may find that an extra $147 a month doesn’t stretch very far.
While Social Security checks are getting bigger, the price of everyday items like food and housing is also going up.
You’ll have a bigger check, but most of it will be eaten up by higher prices.
Another potential drawback? The large COLA will…
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