Social Security benefits to rise 5 9 percent for roughly 70 million

The Social Security Administration announced Wednesday that its beneficiaries will see a 5.9 percent increase in their benefit checks starting next year — the largest boost to benefits in close to four decades. The adjustment will be made for 64 million Social Security beneficiaries as well as 8 million Supplemental Security Income beneficiaries. Some Americans receive both benefits. The cost-of-living increase, which will impact roughly 70 million people starting in late December and January, is tied to a measure of inflation that has surged this year as prices rise in a U. S. economy emerging from the coronavirus pandemic. Experts caution that millions of seniors will in reality see substantially less than a 6 percent bump, because Medicare Part B premiums are deducted from Social Security beneficiaries’ checks and are tied to seniors’ income. The increase in benefits will amount to roughly an additional $92 per month for seniors. The Bureau of Labor Statistics said Wednesday that prices rose 0.4 percent in September compared to August. Overall, prices are up 5.4 percent over the last year. The “cost of living adjustment” that determines Social Security payment hikes is based on a different measure of inflation, but they both capture similar phenomenon in the economy. The biggest program run by the federal government, Social Security is funded by payroll taxes paid by both workers and employers. Monthly payments then flow from Social Security primarily to retirees and people with disabilities, as well as to the relatives of workers who have died, among other groups. The program is the biggest source of retirement income for most seniors, representing more than 90 percent of retirement income for roughly a quarter of older Americans nationwide. Prices have risen throughout the economy since the pandemic, diminishing the value of government benefits beyond Social Security. But while wages have climbed for workers along with inflation, people who do not work are often dependent on government programs to update their payments based on federal metrics that are sometimes out of step with price changes in the economy itself. The average monthly Social Security payments for retired workers will rise from $1,565 to $1,657 starting in January, according to the Social Security Administration. Workers with disabilities will see an average increase from $1,282 to $1,358 after the increase kicks in.“The guaranteed benefits provided by Social Security and the [cost of living adjustment] increase are more crucial than ever as millions of Americans continue to face the health and economic impacts of the pandemic,” AARP Chief Executive Officer Jo Ann Jenkins said in a statement. Also changing is how Social Security taxes are assessed. The program’s taxes are subject to a cap, because it was set up with the intention of having the amount workers paid into the system to mirror what they receive in retirement.


All data is taken from the source: http://washingtonpost.com
Article Link: https://www.washingtonpost.com/us-policy/2021/10/13/social-security-inflation-adjustment/


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