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The Social Security Administration (SSA) has announced that it will be giving an 8.7% cost of living adjustment (COLA) increase to those receiving benefits. The raise will take effect in 2023 and will provide an extra $140 per month for the average recipient. The SSA also increased the COLA 5.9% in 2022. The most recent increase is the highest COLA in 40 years.
With the new COLA, the trust fund will be forced to pay an estimated additional $100 billion in benefits per year. According to the Social Security Board of Trustees, the fund will only be able to pay recipients their full benefits until 2035, at which time it will only be able to pay 80% of the expected benefits.
According to a spokesperson for the Committee for a Responsible Feder Budget, the 2023 COLA could deplete the trust fund a full calendar year earlier than expected.
The reason for the 8.7% COLA is to help retirees combat rampant inflation. Unfortunately, due to the way the COLA is calculated, it does not provide an accurate cost of living for most seniors. Calculations completed in 2020 show that Social Security benefits had seen a 33% reduction in their buying power since 2000 and that was at a time when inflation was considered low.
To complicate matters, Peter Schiff explained how responding to inflation by raising the Social Security COLA actually does more to further increase inflation than to help recipients deal with it. Schiff said, “People are supposed to cut back when prices go up. But if the government gives everybody more money to pay the higher prices, you’re just fueling the inflation, and it’s like a dog chasing its tail. You’re never going to catch it, which is why the government is never going to bring inflation down.”
With the Biden administration disguising excessive money printing as “stimulus packages” and “military aid” for Ukraine, it’s no surprise that inflation is at a 40-year high, and with the Social Security COLA the highest it’s been since an 11.2% increase in 1981, it shows no signs of slowing down anytime soon.