WASHINGTON (AP) — Social Security’s cost of living adjustment, otherwise known as the COLA, for 2023 is expected to be around 9% or even higher, the highest in 40 years, analysts estimate. It will be announced Thursday morning.
It’s not just old people who will gain. About 4 million children receive benefits, and an untold number of others also will be helped because they’re being cared for by Social Security beneficiaries, sometimes their grandparents.
High inflation remains a burden on the broader economy, which has caused the Federal Reserve to raise interest rates in hopes of cooling high prices. But in many ways, inflation hits older Americans harder than the rest of the population. Medical costs are a big part of the burden.
Coupled with a decline in Medicare Part B premium, the Social Security COLA will put more money in the hands of the 70 million Americans who receive benefits. According to the U.S. Census, in 2020, there were about 2.4 million grandparents responsible their grandchildren.
That number has increased exponentially since the government has adopted a “kinship care” approach to child welfare, which centers on keeping kids in homes with their next of kin, as opposed to foster care.
And in turn, while Social Security is generally regarded as a program for older Americans, it also is the nation’s largest children’s support program.
Since the pandemic, Social Security has become even more important for children, as “COVID has taken a lot of parents,” said Maya Rockeymoore Cummings, a nonresident senior fellow at Brookings Metro, which is part of the Brookings Institution, and the CEO of Global Policy Solutions, a social change strategy firm.
The National Institutes of Health reported last October that at least 140,000 U.S. children under age 18 had lost a parent or guardian due to COVID.
Cummings says she estimates the actual number is much higher. “We should understand the increase in the COLA will have a positive net benefit on the entire household — not just older members of the family,” she said.
A study by Global Policy Solutions shows that African American children are in the greatest need of the added help from Social Security benefits.
Grandparent caregivers are 60% more likely to live in poverty than are grandparents not raising grandchildren, according to the U.S. Office of Personnel Management.
The Child Tax Credit program, which was expanded during the pandemic, helped tens of millions of kids and their families, contributing to a 46% decline in child poverty since 2020, according to a September Census report. But that program has ended and already there are indications t hat child poverty is increasing.
Nancy Altman, co-director of Social Security Works, an advocacy group, said “benefits in many other federal programs are eroding — but the COLA makes Social Security unique.”
“And for the children who receive Social Security benefits,” both directly and indirectly, “low-income kids benefit the most,” she said.
William Arnone, chief executive of the National Academy of Social Insurance, an advocacy organization for Social Security, said while the expected COLA is “generous, it is just a catch-up” for many older Americans who are often more impacted by price hikes caused by inflation, especially grandparents taking care of grandkids.
“With Social Security, all generations benefit,” Arnone said.