Social Security benefits to jump by 8.7% next year

Millions of Social Security recipients will get an 8.7% boost in their benefits in 2023.

That’s a historic increase and welcome news for American retirees and others — but it’s tempered by the fact that it’s fueled by high inflation that’s raised the cost of everyday living.

The cost-of living adjustment means the average recipient will receive more than $140 extra a month beginning in January, according to estimates released Thursday by the Social Security Administration.

The boost in benefits. the biggest in 40 years, will be coupled with a 3% drop in Medicare Part B premiums, meaning retirees will get the full impact of the jump in Social Security benefits.

“This year’s substantial Social Security cost-of-living adjustment is the first time in over a decade that Medicare premiums are not rising and shows that we can provide more support to older Americans who count on the benefits they have earned,” said Social Security Administration’s Acting Commissioner Kilolo Kijakaz.

The Social Security announcement came just weeks before the midterm elections, and at a time when Democrats and Republicans are sparring about high prices now and how best to shore up the program financially in the future.

About 70 million people — including retirees, disabled people and children — receive Social Security benefits. This will be the biggest increase in benefits that baby boomers, those born between the years 1946 and 1964, have ever seen.

Social Security is financed by payroll taxes collected from workers and their employers. The maximum amount of earnings subject to Social Security payroll taxes for 2023 is $160,200.

The financing setup dates to the 1930s, the brainchild of President Franklin D. Roosevelt, who believed a payroll tax would foster among average Americans a sense of ownership that would protect the program from political interference.

Next year’s higher payout, without an accompanying increase in Social Security contributions, could put additional pressure on a system that’s facing a severe shortfall in coming years.

The annual Social Security and Medicare trustees report released in June says the program’s trust fund will be unable to pay full benefits beginning in 2035.



US Social Security Administration office in Mount Prospect, Ill., Wednesday, Oct. 12, 2022. Millions of Social Security recipients will get an 8.7% boost in their benefits next year. (AP Photo/Nam Y. Huh)