Biggest Social Security increase in 40 years expected this week
HOUSTON - Seniors could receive the biggest Social Security increase they've had in 40 years. A cost of living hike of 8.7% is expected to be announced this week to help recipients keep up with inflation.
70 million seniors, disabled people, and widowers would receive the boost. But it's a Catch-22. While an increase could help many people struggling with inflation, it could actually make it harder for some.
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"The more money, the better I think. We’re entitled to our share after we all paid in the system for 50 years," said Bernard Patten.
At the Bay Area Community Center in Seabrook, an expected 8.7% increase in Social Security payments is welcome news.
"Of course, I would welcome the money. But the biggest thing that would help me would be to stop inflation and all the investments that I have from going down," said Jeannie Gautiano.
If the COLA increase is 8.7%, the Senior Citizens League says the average monthly check of $1,656 would go up $144 to $1,800, starting January 2023.
"Sticker shock, because I was just shopping for groceries this morning. What was $1.69 last week was $1.99 this week, and I’m going ooooh," said Sandra Clapp.
"I go over my drug plan consistently. So I always go into just short of a donut hole," said Elvira Quinones-Reyna.
"Medicare eats up most of it. I’m fortunate I’m okay at this point, but there are a lot of other people that aren’t," said Gerry Zidek.
While the cost of living adjustment is often eaten up by higher Medicare premiums, this year the standard Part B premium will actually drop from about $170 to $165.
But the Social Security increase may not be good for all recipients.
The Senior Citizens League says 59% of survey respondents say they're already facing a higher federal income tax liability after the 5.9% COLA increase for 2022.
While recipients don't pay federal income tax on benefits below $25,000 a year, those earning $25,000 to $34,000 pay tax on up to 50%, and pay up to 85% on benefits over $34,000.
And this increase could reduce some recipients' eligibility for aid, such as SNAP food benefits. The individual income limit for SNAP in Texas is $1,775, just below what could become the average $1,800 Social Security check.
"Definitely, because my mother gets $2,000 more a year, that would knock out benefits she would have gotten otherwise," said Jeannie Gautiano.
Meanwhile, many recipients say Social Security benefits are still too low. The Senior Citizens League says the average monthly benefit would have to increase $417 to have the same purchasing power as recipients did in 2000.