2022-11-25 11:18:00

Social Security's Record 2023 Increase Isn't All It's Cracked Up to Be

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By The Motley Fool

Retirees feeling crushed by the highest inflation in decades are getting some relief. The Social Security Administration has announced that benefits will receive an 8.7% cost-of-living adjustment (COLA), the highest bump since 1982. In pure dollar terms for the average Social Security recipient, it'll be the largest COLA on record. Don't get me wrong, this is a great thing -- many retirees need every extra dollar they can get.

But look past the headline number, and you'll see that it doesn't change the financial position many retirees find themselves in already. In this annual COLA review, I'll guide struggling retirees and those preparing to enter their golden years.

Image source: Getty Images.

The math behind Social Security falls apart rather quickly

This year's COLA is a step up from last year's 5.9%. I wrote about it then and illustrated how some basic living expenses could quickly eat up a retiree's benefits. You might be wondering how much Social Security can cover once you revisit how high living expenses are these days. As a reminder, the average retired Social Security recipient receives $1,669 per month in benefits.

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