The latest estimates for a new cost-of-living adjustment (COLA) for beneficiaries of Social Security in the United States will likely be very encouraging for those seniors who rely on those benefits, according to a new estimate released this week by nonprofit advocacy group the Senior Citizens League.
“A COLA of 8.7% is extremely rare and would be the highest ever received by most Social Security beneficiaries [who] are alive today,” said Mary Johnson, a policy analyst on the Social Security program for the Senior Citizens League. “There were only three other times since the start of automatic adjustments that it was higher (1979-1981).”
That kind of an increase could mean more than an extra $140 per month according to the estimates shared by Johnson.
“A COLA of 8.7% would increase the average retiree benefit of $1,656 by $144.10 (rounded as done by SSA),” she said. “Readers can calculate the increase by taking their gross Social Security benefit (the amount prior to deductions for Medicare premiums and any tax withholdings) and multiplying it by .087.”
While this is considered historically high, it still may not be enough to keep pace with the levels of inflation currently being experienced, which are also historically high and that have a chance to disproportionately impact people who live on fixed incomes, as seniors often do, explained Johnson.
“Across the board, retired and disabled Social Security recipients spend a bigger portion of their incomes on healthcare costs, housing, and food and less on gasoline,” she said. “Over the past 12 months, they rank food costs as their fastest growing expenditure, housing, and transportation in that order.”
The actual COLA for 2023 is not expected to be released by the Social Security Administration (SSA) until next month. Last year, the COLA of 5.9% for 2022 was similarly historic.
“The 5.9% cost-of-living adjustment (COLA) will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2022,” SSA said in its announcement of the benefit increase last October. “Increased payments to approximately 8 million SSI beneficiaries will begin on December 30, 2021. (Note: some people receive both Social Security and SSI benefits). The Social Security Act ties the annual COLA to the increase in the Consumer Price Index [CPI] as determined by the Department of Labor’s Bureau of Labor Statistics.”
Read more about the SCL estimates for the 2023 COLA.