Social Security Administration hiking benefits 8.7%, highest in 40 years

The Social Security Administration on Thursday announced an 8.7% benefit increase for 2023, marking the largest cost-of-living adjustment in four decades.

Social Security recipients will starting in January have an average of about $140 added to their monthly benefits, according to the agency

The increase is the largest since 1981, when the cost-of-living adjustment was 11.2%, according to The Hill newspaper. 

Americans will also have more of their income subject to Social Security taxes, as the taxable maximum will increase from $147,000 to $160,200.

Additionally, some Social Security recipients may face taxes on their benefits with the announcement. Single filers who make less than $25,000 do not pay taxes on the benefits, nor do joint filers who make under $32,000.

 AARP Chief Executive Officer Jo Ann Jenkins celebrated the decision and said it "will provide much needed relief to millions of Americans."

More than 65 million Americans receive Social Security benefits, and one-in-four senior citizens rely almost entirely on it for income.