Social Security beneficiaries, roughly 70 million, are going to see a 5.9% boost in their benefit checks beginning next year.
The massive increase is the largest in nearly 40 years and is well above the 1.7% average that benefit checks have increased by over the past decade. The news coincides with Wednesday news that inflation increased slightly more than experts had predicted.
Consumer prices rose 5.4% for the year ending September, according to a report by the Department of Labor, the highest pace of inflation since 2008. That is a touch above the 5.3% rate that was expected.
CONSUMER PRICES RISE 5.4% ON YEAR, HIGHEST INFLATION IN 13 YEARS
The last time Social Security benefits saw such a big jump was in 1982.
“There’s been huge inflation, so seniors are about to get a big raise. The problem is that’s going to cut into Social Security’s finances,” said Marc Goldwein, a budget expert at the Committee for a Responsible Federal Budget. “It’s potentially a big new cost.”
As baby boomers continue to retire over the next few years, Social Security spending will rise. The boosted benefits will further pinch the federal government and bolster fear that the retirement fund will only be able to pay out full benefits through 2033.
Calculation of cost-of-living adjustments is tied to inflation during a given year. As the United States has emerged from the pandemic demand for goods and services has skyrocketed — that, along with large amounts of fiscal stimulus pumped into the economy, have caused prices to inflate, causing concern among many experts.
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Bankrate conducted a survey that found that nearly 9 in 10 adults in the U.S. have felt the sting of rising prices, and 66% of those say that inflation has negatively affected their personal financial situation.
While inflation is one factor that is top of mind for economists, the current labor market is also suffering. The economy added just 194,000 new jobs in September, well short of forecasts of 473,000 new jobs. The unemployment rate is at 4.8%, which is above the 3.5% pre-pandemic level.
