The surging inflation and a series of lack down in previous years had negatively impacted all ages of Americans, particularly pensioners on Social Security, who might have struggled even more.
Last year, Social Security increased the cost-of-living adjustment (COLA) to 5.9%, which seemed generous then. However, the pace of inflation made the increase meaningless and decreased pensioners’ buying power.
This year, Social Security has to boost COLA to 8.7% – a significant increase from 5.9% and the largest raise in decades. For the past two months, the boost enabled pensioners to breathe amidst the rising costs of daily necessities.
However, many pensioners think that the increase will be a repeat in 2022 in terms of losing buying power.
Will the 8.7% Increase Keep Up in 2023 Surging Inflation?
The Senior Citizens League conducted a survey and found more than 54% of older Americans do not believe the 8.7% boost will keep up with the rising living costs. Some pensioners also said their living expenses rose more than the COLA increase.
Almost all survey respondents (96%) believed the massive increase would not help them keep up with the inflation. Instead, they are worried the increase could result in a higher tax bill. According to Yahoo Finance, starting in January, the 8.7% increase would boost into $140 per month. Many pensioners were pushed over the threshold limits. For instance, pensioners might pay higher taxes once they exceed the $32,000 for married couples filing jointly and the $25,000 threshold for single tax filers.
Yahoo Finance reports pensioners are currently seeing surging inflation rates never seen in over 40 years, which might make it harder for them to adjust to the higher living costs. The Motley Fool reports some pensioners are pessimistic about the COLA increase due to the historical record of Social Security doing a poor job of keeping up with inflation.
Are Pensioners Satisfied with the 8.7% COLA Increase?
A newly released Gallup poll showed that more than (63%) of 65 and older respondents say they’re satisfied with the Medicare and Social Security programs.
Marc Goldwein, the senior policy director for the Committee for a Responsible Federal Budget, said Social Security is the program helping these people deal with the high inflation. Maurie Backam of The Motley Fool hopes 2023 will be an easier financial year for these pensioners than last year.