The current rise in inflation may have mixed effect on Social Security recipients. “A COLA of 8.7% is extremely rare and would be the highest ever received by most Social Security beneficiaries alive today,” Mary Johnson, a policy analyst at the Senior Citizens League who conducted the research, said. “There were only three other times since the start of automatic adjustments that it was higher.””There can be some very long-term effects to high inflation COLAs,” Johnson previously told FOX Business. “It’s like a no-win situation.”
Should Social Security beneficiaries see an 8.7% increase in their monthly checks next year, it would mark the steepest annual adjustment since 1981, when recipients saw an 11.2% bump. An increase of that magnitude would raise the average retiree benefit of $1,656 by about $144 per month or roughly $1,729 annually, the group said. 
“A COLA of 8.7% is extremely rare and would be the highest ever received by most Social Security beneficiaries alive today,” Mary Johnson, a policy analyst at the Senior Citizens League who conducted the research, said. “There were only three other times since the start of automatic adjustments that it was higher.”
However, the decades-high benefit increase is not always good news for recipients, according to Johnson.
Higher Social Security payments are a bit of a Catch-22. They can reduce eligibility for low-income safety net programs, like food stamps, and can push people into higher tax brackets, meaning retirees will pay more taxes on a bigger share of their monthly payments.
Since 1984, retirees have owed taxes on their benefits if their income – including their Social Security payments – is more than $25,000 if they are single, or $32,000 if they are a married couple. Individuals who earn more than $34,000 and couples who earn more than $44,000 can be taxed on up to 85% of their benefits.
Some seniors may never have owed taxes on their benefits, but that’s likely to change next year when they file their tax returns. In fact, the Congressional Budget Office has estimated the share of Social Security benefits subject to tax could grow by 10% this year and another 10% in 2023. In all, total income taxes paid on that money are projected to climb by 37% this year.
