This Thursday, the Social Security Administration (SSA) announced that Social Security recipients would receive an annual cost-of-living adjustment (COLA) of 8.7% to their monthly benefit checks beginning in 2023. The adjustment is expected to raise recipients’ monthly benefit payments by $146, up to an estimated average of $1,827 per month.
SSA adjusts recipients’ monthly benefits every year to keep pace with inflation. Last year, monthly benefit payments increased by 5.9% for this year. The 8.7% increase for 2023 is the largest single-year percentage increase since 1981, and is due to rampant inflation this year.
On the same day that SSA announced this historic COLA, the Bureau of Labor Statistics (BLS) announced that the consumer price index, a common measure for inflation, increased by 8.2% compared with a week ago. The average year-to-year inflation rate for the past 10 calendar years is 2.15% per year, nearly a quarter of this September’s year-to-year inflation rate.
Despite this year’s historic COLA, a long-term view of Social Security benefits reveals that they have not kept up with inflation in recent decades. A study released by The Senior Citizens League this year revealed that Social Security payments have lost around 40% of their buying power since 2000, despite regular COLAs. To keep pace with inflation since 2000, the study suggests that Social Security benefits need to be increased by around $540 on average, significantly more than the estimated average increase of $146. Advocates are calling on Congress to change the formula they use to calculate COLAs to better reflect the inflation that retirees are experiencing.
While this historic COLA will help millions of retired Americans across the country fight back against rising prices, the majority of Texas retired educators will not see the benefits of a Social Security COLA. The Teacher Retirement System of Texas (TRS) estimates that 96% of public school employees do not pay into Social Security and will only receive Social Security if they paid into the system with a different employer.
Even those who have paid into Social Security will have their benefits reduced by the Windfall Elimination Provision (WEP) and will have any survivor Social Security benefits reduced by the Government Pension Offset (GPO). AFT is currently pushing the US congress to remove these harmful provisions so that retired educators can receive the social security they earned and deserve.
While Social Security recipients receive a COLA to their Social Security benefits every year, any TRS educator who has retired in the past 18 years has never seen a COLA increase to their TRS monthly annuity.