WASHINGTON (NEXSTAR) – Social Security recipients will soon get more money to help deal with the costs of inflation.
The Social Security Administration announced Thursday that Social Security checks will get an 8.7% boost next year. That means, on average, the 70 million recipients will get an extra $140 each month.
“This may be the first and last time we ever see a COLA (cost-of-living adjustment) this large,” Mary Johnson with the Senior Citizens League said.
She predicts this will help seniors at a time when she says many are skimping on meals or skipping prescriptions to cut costs.
“People are looking forward to maybe stocking up a pantry, having the funds to pay to fill up a fuel tank to heat up their homes in the winter,” Johnson said.
Social Security payments are adjusted each year with a cost of living adjustment meant to match inflation. This is the highest increase in 40 years.
George Washington University economics professor Joseph Cordes says this will be crucial.
“It certainly will have positive impacts, particularly for those retirees who really have to depend on the Social Security check as their main source of income,” Cordes said.
He adds that the purpose of the COLA is to balance out changing costs.
“It’s going to hold their spending power from Social Security constant in the face of inflation,” Cordes said.
Although the increase could lead to more spending, Cordes doesn’t believe it will fuel inflation.
“It’s certainly something the economy can absorb. I would not say that it’s going to have major negative impacts,” Cordes said.
As prices continue to rise, Johnson recommends seniors save as much of the extra money as possible.
“Enjoy this now, we may never see this again. But don’t spend it all in one place,” Johnson said.
In more positive news for seniors, Medicare Part B premiums are going down instead of up next year, providing another boost to their budgets.