The Social Security Administration recently announced that Social Security beneficiaries will get an 8.7% increase in their benefits in 2023. Thanks to the current high inflation, this is the highest increase in 40 years and the second year in a row that there’s been a substantial increase, 5.9% in 2022 and now 8.7% for 2023.
Inflation is seldom a good thing, but when it comes to investing, the U.S. Treasury Department has an inflation opportunity that’s downright amazing. You can buy bonds that pay 9.62 percent interest — tax-deferred — with no downside risk, and with no state or local income taxes when you cash them in.
Has rising inflation got you down? In our last piece, “Understanding Interest Rates” we explored how rising and falling interest rates can impact a healthy economy. Today, let’s add inflation to the conversation.
At its March 15–16 Federal Open Market Committee (FOMC) meeting, the U.S. Federal Reserve raised its federal target funds rate by a quarter point. It was the first increase since December 2018, but it wasn’t a huge surprise. Fed Chair Jerome Powell had already said we should expect as much, with the potential for additional hikes before year-end.