By Tom Ozimek
More than 7 million Americans were slated to begin receiving bigger government benefit payments on Dec. 30 after soaring inflation prompted a near-record high 8.7 percent cost-of-living adjustment (COLA) which, as the year progresses, will ultimately see nearly 70 million people getting a benefit boost.
Social Security and Supplemental Security Income (SSI) benefits were slated to increase by around $140 per month on average after the Social Security Administration (SSA) announced earlier in 2022 that the cost-of-living adjustment for 2023 would be the biggest since the 1980s.
The 8.7-percent adjustment was due to decades-high inflation squeezing the budgets of American families.
Individual SSI payments, which millions of Americans were to start receiving on Dec. 30 because Jan. 1, 2023, is a public holiday, went up from a maximum of $841 per month last year to $914 per month in 2023 after the COLA bump, according to a fact-sheet (pdf) released by the SSA.
Recipients of Social Security payments will get their new bigger checks later in January, with the specific date depending on when their birthday falls.
In total, over 65 million Americans will receive bigger benefits in January, with the SSA noting that the fastest way for people to find out their new benefit amount is to access their personal “my Social Security” account.
When Are the New Checks Coming?
In January, beneficiaries will receive their new bigger checks on a date—the second, third, or fourth Wednesday—depending on their birthday.
People born between the 1st and the 10th will get their new benefit checks on the second Wednesday of January.
Those born between the 11th and the 20th will receive their first new check on the third Wednesday of January, while people born after the 21st will get their bigger checks on the fourth Wednesday of this month.
The average monthly Social Security benefit for all retired workers is $1,827 after the 8.7-percent COLA bump, which is $146 higher than the pre-adjustment amount of $1,681 in 2022, according to SSA estimates.
The recent COLA adjustment came in response to soaring inflation, which reached as high as 9 percent in June before tapering off slightly over the summer.
The 8.7 percent hike is the biggest since the SSA announced an 11.2 percent boost in 1981, which followed a 14.3 percent increase in 1980.
Last October, the SSA announced a 5.9 percent increase, which was the biggest in around four decades.
Prior to that, the adjustments were small because the rate of inflation was low.
‘The Worst Is Yet to Come’
A long period of low inflation ended after COVID-19 hit, as the government and the Federal Reserve flooded locked-down businesses and households with trillions of dollars in stimulus and support.
While the money helped businesses keep workers on payrolls and bolstered consumer spending, it also led to an inflationary jump in demand as supply chains that were crippled by pandemic restrictions couldn’t keep up.
Idled factories were unable to ratchet up production fast enough to meet the jump in demand, an inflationary dynamic made worse by labor shortages as more people who were close to retirement left the workforce permanently amid the pandemic and as generous stimulus checks kept others from seeking employment.
Inflation in the United States, as measured by the Consumer Price Index (CPI), soared from a pandemic-era low of 0.24 percent in May 2020 to a recent peak of 9 percent in June 2022.
In the face of soaring inflation, central banks across the world have hiked interest rates in a bid to cool demand and relieve price pressures. This, in turn, has led to economic slowdowns and has raised the risk of a recession.
The International Monetary Fund (IMF) said in its latest biannual global economic outlook, released in October, that it expected inflation to peak in late 2022 but warned that it would “remain elevated for longer than previously expected.”
The latest CPI inflation reading from November 2022 came in at 7.11 percent year-over-year, federal data shows.
The IMF said it expects U.S. inflation for all of 2022 to come in at 8.1 percent and to cool sharply to 3.5 percent for 2023.
At the same time, the IMF said in the report that, despite projections for lower inflation, it expects more economic pain.
“More than a third of the global economy will contract this year or next, while the three largest economies—the United States, the European Union, and China—will continue to stall,” the IMF said in the report.
“In short, the worst is yet to come, and for many people 2023 will feel like a recession.”