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Social Security recipients will be willing to receive a standard cost-of-living adjustment in 2023 due to inflation. The question is exactly how high it is.
Based on New CPI data In a June release released on Wednesday, the Senior Citizens League, a large nonpartisan group, now estimates the cost-of-living adjustment will be 10.5% for 2023.
According to the Senior Citizens League, 10.5% of COLA’s would amount to $175.10 in an average monthly retirement benefit of $1,668.
By comparison, the group Estimated last two months COLA indicated for the next year may be 8.6%.
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This is the Consumer Price Index for all urban consumers, or CPI-U, It rose 9.1% in June over the past 12 months, the fastest pace since 1981.
Meanwhile, the measurement the Social Security Administration uses to calculate COLA each year — the Consumer Price Index for urban wage earners and clerical workers, or CPI-W — has risen 9.8% over the past 12 months.
To be sure, COLA’s estimate for next year is still tentative. The Social Security Administration calculates the annual adjustment by taking the average data for the third quarter of the current year and comparing it to the third quarter of the previous year.
The actual increase for next year may vary depending on how high inflation is in the coming months.
“Looking forward, there are a number of reasons why we can expect these higher prices to come down over the coming months,” White House Press Secretary Karen-Jean-Pierre said at a press conference this week.
If inflation calms down in the coming months and is below the recent average, the global inflation rate could reach 9.8%, according to the Senior Citizens Association. If instead it is hot or above the last average, the increase in benefits could be 11.4%.
In 2022, Social Security recipients received a record 5.9% increase in benefits, the highest increase in nearly 40 years. However, inflation has escalated since then.
How much more money can the beneficiaries get
To find out how much extra money the projected increase will mean for you, multiply 10.5% by the total amount of the benefit.
Your total benefit amount can be found in the new benefit amount sent by the Social Security Administration for benefits 2022, which most beneficiaries received in either December or January, according to Mary Johnson, Social Security and Medicare policy analyst at the Senior Citizens League.
How much money your beneficiaries actually see depends on the size of your Medicare Part B premiums for the next year. Medicare Part B premiums are usually deducted directly from Social Security checks. In 2022, those installments 14.5% increased to raise the standard monthly premium to $170.10 a month, which was one of the highest jumps in the program’s history, according to Johnson.
“The beneficiaries are still getting hurt by this,” Johnson said.
Bigger COLA Technology May Affect Social Security Solvency
The higher COLA ratio for 2023 may not all be good news.
High-income individuals may have to pay more for Medicare Part B and Part D benefits, according to Johnson. Meanwhile, lower-income recipients may see reductions in income-related benefits as their monthly paychecks increase, she said.
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Social Security Standard COLA 2023 It will also affect the expected exhaustion dates of Social Securityaccording to the Committee on Responsible Federal Budget, a nonprofit, nonpartisan organization.
The annual Social Security Trustees’ report released in June predicted that funds raised for the program would run out in 2035, at which point 80% of benefits would be paid. This is based on data up to mid-February.
Using the latest inflation assumptions, the Committee on a Responsible Federal Budget Insolvency of social security projects It will happen in 2034 instead of 2035.
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