In an effort to keep up with record inflation and the rising cost of living, millions of Social Security recipients will receive an 8.7% increase in their monthly benefits starting in January, the Social Security Administration announced Thursday. 

This is the highest cost-of-living adjustment the agency has issued in 40 years. Average benefits for people who are retired, disabled, relatives of workers who have died or are dependent on beneficiaries will increase by over $140 per month.

In Washington state, 18% of the population will receive these benefits, with the majority retirees and women ages 65 and older, according to latest available data from the administration.

Inflation and wage growth determine the cost-of-living adjustment for Social Security benefits.

Nationally, the consumer price index, a shorthand measure for the cost of living, rose by 0.4% in September, driven by increases in the costs of housing, food and medical care, the Bureau of Labor Statistics announced Thursday. In August, the index had risen by 0.1%. 

The adjustment is supposed to keep benefits in line with inflation over the past year, but if prices keep rising, you fall behind again immediately, said Jacob Vigdor, an economist with the University of Washington Evans School of Public Policy. 


“Imagine rising prices being like a car speeding away from you,” Vigdor said. “The cost-of-living adjustment instantly transports you to where the car is at a point in time, but if it’s still moving you’re just going to see the car speed away from you again.”

While the bump in monthly payments helps beneficiaries cope with the ongoing spike of everyday costs, its relief will be felt unevenly across the U.S. 

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Social Security benefits are adjusted every year for inflation but not for differences in cost of living across regions.

“So these Social Security checks don’t go nearly as far in the Seattle area as they would in lower-cost parts of the country,” Vigdor said. “The 8.7% increase in benefits will surely be welcome to Seattle-area retirees and other beneficiaries, but they’re getting the same increase as the rest of the country.”

Essentially, inflation is the case of too much money chasing too few goods. “The ‘too few goods’ in our economy are mainly the result of pandemic-related supply chain problems causing shortages,” Vigdor said.


In 2021, the strong demand for workers and hiring difficulties across different sectors drove the average wage growth in Washington to the second-largest increase on record.

“Prices go up, and workers quite reasonably start looking for wage increases to keep up with the cost of living,” Vigdor said. Some, like Social Security recipients and Washington minimum wage earners, get automatic income increases based on the conditions of the economy. 

However, most of the increase in average or median wages was limited to the Seattle metro area and to tech-related occupations. Further, these wage gains have barely kept up and are more likely eaten by the rising costs.

“We aren’t headed for one of those scenarios where you have to take a wheelbarrow full of cash to the bakery to buy bread,” Vigdor said. “But don’t expect inflation to magically disappear until we unravel the knots that the pandemic tied in the economy.”