- This is the highest increase in Social Security benefits in more than 40 years
- Recipients can expect an average of $140 more per monthly payment
- The increase is tied to rising prices of goods and services
Social Security payments will increase an average of $140 per month starting in January for 2.2 million Michigan residents receiving the benefit.
On Thursday, the U.S. Social Security Administration announced an 8.7 percent cost of living increase, the biggest increase in more than four decades. In Michigan, more than a third of households, 34.5 percent, receive the benefits, according to the latest U.S. Census Statistics.
That’s well above the 31 percent of households nationally.
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On average, those Michigan households receive just over $22,000 a year in benefits. The 2023 increase will add roughly $1,900 to the annual income of each household.
The increase comes as inflation rose 0.4 percent in September, boosting the annual rate to 8.2 percent. Last month alone, prices of cereal rose 1 percent, rent 0.8 percent, and car insurance 1.6 percent. Gasoline decreased by 4.9 percent, but prices are already on the rise again in October.
Social Security has four types of benefits: retirement, disability, survivors of a person who’s passed and Supplemental Security Income.
Some higher earners’ taxes will increase.
Currently, Social Security taxes — 7.65 percent for employees, 15.3 percent on the self-employed — are only paid on income up to $147,000. With the changes announced Thursday, the cap rises to $160,200.
That means those who make more than $147,000 will pay more in Social Security taxes.
For instance, if someone makes $148,000, they’d pay an extra $76.50 in Social Security ($1,000 times 7.65 percent). If they make $160,200, it’d be an additional $1,010.
Michigan does not tax Social Security benefits.
Monthly benefits will rise:
- Retired workers: $1,827, up from $1,681
- Retired couples: $2,972, up from $2,734
- Widowed mothers with two children: $3,520, up from $3,238
- Disabled workers, their partners and one or more children will receive $2,616, up from $2,407
- All disabled workers will get $1,483, up from $1,364
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