Social Security recipients expected to get big benefit boost | AP News
Category: News & Politics
Via: perrie-halpern • 3 years ago • 25 commentsBy: FATIMA HUSSEIN (AP NEWS)
S E E D E D C O N T E N T
WASHINGTON (AP) — Millions of Social Security recipients will learn soon just how high a boost they'll get in their benefits next year.
The increase to be announced Thursday, expected to be the largest in 40 years, is fueled by record high inflation and is meant to help cover the higher cost of food, fuel and other goods and services. How well it does that depends on inflation next year.
The boost in benefits 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.
The announcement comes 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.
President Joe Biden has pledged to protect both Social Security and Medicare. "I'll make them stronger," he said last month. "And I'll lower your cost to be able to keep them."
White House press secretary Karine Jean-Pierre said in a statement Wednesday that the combination of a Social Security benefit boost and a decline in Medicare premiums will give seniors a chance to get ahead of inflation. "We will put more money in their pockets and provide them with a little extra breathing room," she said.
About 70 million people — including retirees, the disabled 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.
Willie Clark, 65, of Waukegan, Illinois, says his budget is "real tight" and the increase in his Social Security disability benefits could give him some breathing room to cover the cost of the household expenses he's been holding off on.
Still, he doubts how much of the extra money will end up in his pocket. His rent in an apartment building subsidized by the U.S. Department of Housing and Urban Development is based on his income, so he expects that will rise, too.
Social Security is financed by payroll taxes collected from workers and their employers. Each pays 6.2% on wages up to a cap, which is adjusted each year for inflation. The maximum amount of earnings subject to Social Security payroll taxes for 2023 is $155,100.
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.
If the trust fund is depleted, the government will be able to pay only 80% of scheduled benefits, the report said. Medicare will be able to pay 90% of total scheduled benefits if the fund is depleted.
In January, a Pew Research Center poll showed 57% of U.S. adults saying that "taking steps to make the Social Security system financially sound" was a top priority for the president and Congress to address this year. Securing Social Security got bipartisan support, with 56% of Democrats and 58% of Republicans calling it a top priority.
Some solutions for reforming Social Security have been proposed — but none has moved forward in a sharply partisan Congress.
Earlier this year, Sen. Rick Scott, R-Fla., issued a detailed plan that would require Congress to come up with a proposal to adequately fund Social Security and Medicare or potentially phase them out.
Senate Minority Leader Mitch McConnell, R-Ky., publicly rebuked the plan and Biden has used Scott's proposal as a political bludgeon against Republicans ahead of midterm elections.
"If Republicans in Congress have their way, seniors will pay more for prescription drugs and their Social Security benefits will never be secure," Jean-Pierre said.
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The oldest millennials are probably already eyeing Social Security and Medicare with some interest in keeping them viable for themselves.
It's funny how youth is a program we all eventually age out of.
Me? I've already aged out of the youth program and look forward to the increase.
Good news for the senior citizens who need it. A little more gravy for those who don't.
How about the timing of this bit of news?
New Cola numbers are announced EVERY October.
Thank you.
The increase is projected to be 8.7%. We'll know for sure in a few days when SS makes the announcement.
A great investment now is I Bonds (inflation protected bonds) paying 9.62%.
It was a great investment when I told everyone here to cash out of the market and buy them:
"Inflation-adjusted Series I savings bonds have been the most enticing place to park your cash this year— nearly 10% interest , backed by the U.S. government, the safest investment around. In a few weeks, a little of the luster will fade.
I Bonds would likely pay about 6.4% interest beginning Nov. 1 if the consumer-price index rises as economists expect by 0.2% monthly and 8.1% year-over-year. Savers loaded up on I Bonds when the rate leapt to 9.62% in May, the highest interest rate since I Bonds were introduced in 1998."
I suppose 6.4% is still very good for a return during a bear market/recession.
I don't know why everyone should cash out of the market, it is always up and down and one uses it for what fits their investment needs. There is a limit on the $ amount of I bonds that you can purchase in a year.
6.4% is a good return anytime.
As I have little faith in what the current administration says, I will believe it when I see the deposit in my checking account. Until then, it is just meaningless talk and political posturing/pandering.
I'm confidant that a significant increase will happen given the ongoing rate of inflation. To pay the increase just means that the administration draws down the the two SS Trust Funds faster. Since the funds are just intergovernmental bonds with no assets behind them, they have to increase US debt and borrow the difference. The good news is that we will pay the interest and principal on past debt with dollars not worth as much.
That's the good news?
Thats the way it works. When there is high inflation there is a matching increase in monthly Social Security. When inflation is low the increase is low.
What do you want to do, make people living on Social Security suffer?
The national debt is not the problem right wingers make it out to be.
Exactly.
No, why would you ask that.
Of course not, even though we will pay more in debt interest each year, the money will be worth less.
It was officially released this morning at 8.7% and like last year when we discussed this it's not a moving target after the official declaration. It doesn't matter who's in the administration it's a non-partisan mathematical function.
"We will put more money in their pockets and provide them with a little extra breathing room," she said."
No dear, "we" will not. Your boss has done nothing to lower prices
The increase is officially 8.7%. Personally I was hoping for 9.6, but I'll take the nearly $60 increase in my monthly VA Disability check.
I wonder if they are going to adjust the tax rates for Social Security income? If not there could be some people who will have to start paying taxes on their SS due to this boost.
Congress would have to do that and I don't see them taking that issue up before the election. Maybe in the "lame duck" session after the vote. Some 12 or 12 states count SS as taxable state income.
I don't see Congress taking it up even in the lame duck session.
States set their own tax rates so the states that tax SS income would need to do their own work. But there can be taxes owned on SS income at the federal level also.
Me either.
Yes and I haven't heard that any of them will.
I know.