An Outrageous Update on Social Security
With rising inflation, Social Security recipients were looking forward to what was an anticipated “double-digit” 10.1% Cost of Living (COLA) increase in 2023. That 10.1% was down from a once anticipated 11.4%.
However, now the experts say that Social Security beneficiaries can kiss anything near that goodbye, and the COLA increase for 2023 will likely be more in the neighborhood of an 8.7% increase.
The announcement of the COLA for the following year comes in the second week of October. Those seniors who rely on SSI and have been hit hardest by inflation and who were looking forward to a predicted double-digit increase are now likely to be quite disappointed. COLA is supposed to be a raise passed along to the program’s more than 65 million beneficiaries that accounts for inflation and helps them to keep pace without losing spending power.
Since we have been experiencing nearly unprecedented double-digit inflation for most of 2022, it seemed a no-brainer to expect a similar COLA increase. However, due to the quirks in the way COLA is determined, inflation figures only from the third quarter (July through September are factored in. While the other nine months of the year can help identify price trends, they won’t factor into Social Security’s COLA.
In the third quarter, inflation started to decline. This was good for most American, but not necessarily those who rely on SSI to make ends meet.
While recipients can still count on receiving their largest Social Security raise in over four decades, it will not be as high as once thought. Earlier this year, Mary Johnson, a Social Security policy analyst at The Senior Citizens League (TSCL), a nonpartisan senior advocacy group, estimated that COLA could come in as high as 11.4% in 2023 if inflation data continued to roll past expectations. The July inflation report from the Bureau of Labor Statistics (BLS), which showed the headline inflation rate easing, quickly put this high-end estimate to bed.
Following the release of August inflation data by the BLS last week, Johnson’s next high-end estimate of a 10.1% COLA can also be kissed goodbye. Although Wall Street was less-than-pleased with the 8.3% August inflation rate, it continued a two-month decline in the headline figure.
As of the Sept. 14 update from Johnson, Social Security’s COLA now appears to be on track for an estimated 8.7% increase in 2023. For the average retired worker, who should be bringing home $1,683 a month by December 2022, an 8.7% “raise” would equate to an extra $146 per month in 2023, or a little over $1,750 more for the full year.