According to the Social Security Administration, nearly 90% of Americans aged 65 and older receive Social Security benefits. Additionally, “among retired Social Security recipients, 13% of men and 15% of women rely on Social Security for 90% or more of their income.”
Each year, the cost-of-living adjustment (COLA) is one of the most significant announcements, as millions of Americans rely on social security to pay rent and purchase groceries. And, based on recently released inflation figures, the Senior Citizens League estimates that the Cost of Living Adjustment for 2023 will be 8.9 percent.
If the 8.9 percent estimate is correct, it would represent the largest increase in social security benefits in nearly 41 years. And, while this may appear to be a good thing at first glance, it’s critical to remember that the cost of living adjustment exists to keep pace with inflation.
Citing an Investopedia article:
“A cost-of-living adjustment (COLA) is a payment made to Social Security and Supplemental Security Income (SSI) recipients in order to offset the effects of rising prices in the economy—commonly referred to as inflation.”
The US Department of Labor recently reported that its consumer price index increased by 8.5 percent year over year in March, the highest annual increase since 1981. Prices have reportedly increased as a result of constrained supply chains, strong consumer demand, and disruptions in global food and energy markets exacerbated by the Ukraine crisis.
According to The New York Times, “price pressures have been particularly painful for American households, particularly those with lower incomes and a high reliance on necessities.” As a result, millions of Americans would undoubtedly benefit from an increase in social security benefits.