Social Security Cost of Living Adjustment Announced at 8.7% Beginning January 2023 – Why That’s Good and Bad

This morning the Social Security Administration announced Social Security recipients will receive a cost of living adjustment (COLA) of 8.7% beginning in their January 2023 checks.

This is a much needed increase, especially for American retirees who rely primarily on Social Security payments to live.

We’ve seen significant inflation over the past year – rates of inflation not seen for 40 years. And that inflation has led to the increase of costs for just about every product and service you can think of.

If you’re living on a fixed, or somewhat fixed income, your available money has not come close to matching the cost increases you’ve had to bear.

In fact, even those who are employed, and have received pay increases this past year, have not received enough of a bump to maintain their pre-inflation purchasing power.

The 8.7% COLA for Social Security recipients will definitely help offset the significantly negative effects of inflation.

But there’s another side to the COLA coin.

Social Security Sustainability

We, as human beings, tend to consider our personal situation first and foremost. For survivability’s sake, that’s not all bad.

But, sometimes a look at the bigger picture and how certain moves can impact the future need to be taken into consideration.

Which is one of the primary reasons Savings Beagle was launched. Having worked in government/politics, with a focus on budgeting, it was clear there are significant fiscal issues that will impact the average American in the coming years. We’re trying to help everyone offset those issues, one money-saving strategy/deal at a time.

The U.S. government has been lax in focusing on the long-term financial picture for years, even decades, now.

We’ve known for quite some time that Social Security has a solvency problem, that if not addressed, will result in the reduction of monthly check amounts by roughly 20% in the early 2030s.

Yet our elected leaders have done nothing to shore up the program; instead spending significant sums of money on a variety of other endeavors.

You can add the Medicaid and Medicare programs to the list of financially challenged federal programs, as well.

And yet, our federal government continues to spend well beyond its means each and every year.

Our current leaders like to tout their prudent fiscal handling of the economy, “significantly reducing the deficit.” Let’s just say, anything can be spun to sound positive.

Here are the numbers. Judge for yourself.

The federal government brought in $4.0 trillion in revenue in Fiscal Year 2021.

The federal government spent $6.8 trillion in Fiscal Year 2021.

Meaning the U.S. spent $2.8 trillion more than it had available.

And that $2.8 trillion was added to America’s debt, which now stands at $31 trillion, an amount that continues to hit levels never before seen.

All of this over-spending when programs – Social Security, Medicare and Medicaid – that have significant sustainability issues, remain unaddressed.

And the Social Security COLA that was announced today – much needed as it is – will only make Social Security less viable in the coming years.

Our federal government must address its spending issues and focus on shoring up programs that are vital to most Americans.