The Social Security Administration (SSA) has given its recipients a 8.7% raise after four decades, and record high inflation. Retirees will see their monthly payments increase by $146, to an estimated average of $1,827 for 2023. When you consider the average annual SSA income received by African American men 65 years and older was $14,409 compared to $12,806 for African American women, this raise can’t come soon enough.
The Breakdown You Need To Know:
There are more than 65 million Social Security beneficiaries across the country and the system returns a greater percentage of pre-retirement earnings to a lower-wage worker than to a higher-wage worker, CultureBanx reported.
For African Americans, aged 15–64, who worked full-time for 50 weeks or more, the SSA found that the median earnings were around $40,000 compared to $50,000 for all races.
Benefits have not kept up with the rising cost of living for years. African Americans will represent a larger part of the general U.S. population and perhaps the need will be even greater to increase the monthly amount people receive. Today, about 13.4% of the population is African American. This proportion is expected to grow to 13.8% by 2030 and to 15% by 2060, according to the SSA.
Running Out Of Benefits:
A Senior Citizens League study found that inflation has caused Social Security payments to lose 40% of their buying power since 2000. This is a major problem because 42% of elderly women and 37% of elderly men rely on the monthly payments for at least half their income, according to the Social Security Administration. The study concluded that monthly benefits would have to increase by $540 to maintain the same level of buying power as in 2000.
What’s Next:
It’s possible that the 8.7% increase in social security benefits might actually end up hurting some seniors. The larger monthly income could push them above the thresholds for certain government benefits, such as Medicare Extra Help, Medicaid, food stamps and rental assistance. Not to mention as these SSA numbers continue to increase some seniors may have to start paying taxes again.
A recent report from the Social Security trustee found that pay benefits for retirees will be depleted by 2035. It will only be able to distribute roughly three-quarters of promised payments. The current new benefits will go into effect January 2023.