Inflation is an ongoing process that leaves no one behind at any time. In the United States, inflation is at work in every household, whether families have Social Security or not. To respond to this inflation, the United States Government implements the COLA every year. In this way, with Cost-of-living-adjustment retirees can achieve balance in purchasing power. But what looks like good news in the short term, in the long term can be a really bad thing. Social Security funds are not infinite and could start running out sooner than expected with so many COLA increases year after year.
By next year 2023 we will see a COLA increase of 8.7%. This implies that Social Security retirees with an average benefit of $1,666 will get a subsidy increase of $140. So, that will be millions and millions of extra dollars that the Social Security Administration will send starting in January of next year 2023. This means, therefore, that the trust funds will begin to drop considerably from the time next year begins. Thus, this increase in Social Security would not be such good news for seniors and people with disabilities.
On the other hand, getting the trust funds increased should be one of the goals of the administration and Congress. Raising taxable money for the wealthiest is one of the big goals. The highest earners must pay higher payments in order to ensure that the trust funds continue to grow. Otherwise, all we will see is a meteoric drop in Social Security’s cash funds. It is possible that in as little as 30 years there will not be enough money to pay all the pensions.
Social Security’s Largest COLA in Decades
This reflection on the coming depletion of the Social Security trust funds begins with the record COLA increase. Everything about the increase in Social Security benefits is a very dangerous topic for most U.S. citizens. It is very difficult to maintain a balance where retirees do not lose purchasing power while not running out of trust funds.
The COLA for 2023 will be the largest COLA in decades. Nothing like it has been seen since 1980. The increase will be 8.7%. Despite this, it doesn’t seem to be enough for retirees to have their golden years secured and with a good amount of money. For the time being, we can only wait and see what will happen in the future, but everything seems to indicate that in a few years the Social Security Administration will have problems with the payments if it does not find an immediate solution.