Tens of millions of Social Security beneficiaries will soon experience the largest payment increase in over 40 years. Next year's 8.7% hike is expected to raise monthly Social Security checks by an average of around $150 per recipient.

On Thursday, the Social Security Administration announced the adjustment in response to soaring inflation numbers that have increased prices across the board for Americans. Cost-of-living adjustments (COLA) happen every year, but the 2023 raise is the highest in four decades.

"The COLAs really are about people treading water; they're not increases in benefits," said Dan Adcock, director of government relations and policy at the National Committee to Preserve Social Security and Medicare.

Beneficiaries experienced a 5.9% price hike earlier this year, which at the time was the largest in four decades. The record high came in 1981, when the increase was 11.2%.

Controversy has followed the increase in benefits for Social Security benefits, even as supporters tout its necessity when tied to inflation. The trust funds that back Social Security can pay full benefits through 2035, the Board of Trustees said in June.

However, back-to-back historic hikes in benefits could expedite the depletion of the trust funds by at least one calendar year earlier. Social Security also ran a deficit of $127 billion in 2021, adding fuel to the fire for those who wish to see its budget slashed.

Social Security remains popular with senior organizations, as it is the sole income source for the elderly that adjusts with inflation numbers. In 2020, Social Security paid benefits to 69.1 million Americans as the largest source of retirement income for older Americans.

"The guaranteed benefits provided by Social Security, including the annual COLA, are more crucial than ever, as high inflation remains a problem for older Americans, "AARP CEO Jo Ann Jenkins said in a statement. "The automatic adjustment is an essential part of Social Security that helps ensure the benefit does not erode over time due to rising prices."

Inflation Social Security