Social security beneficiaries in the United States could see a cost of living adjustment (COLA) by as much as 9.6% in 2023, according to new data released this week by the Bureau of Labor Statistics. While previous estimates had pushed that estimate as high as 10.8%, inflation has moderated though the COLA would still mark a significant increase based on historical data according to a column at Money.com.
“The latest estimate, based on data released Wednesday by the Bureau of Labor Statistics, hints at a COLA for 2023 of as much as 9.6%,” the column reads. “That would mean the average retiree would see a $159 monthly increase in their benefits — about $1,900 for the year, according to the Senior Citizens League, a nonpartisan advocacy group for older adults.”
Prior estimates of a higher potential COLA were based on the idea of inflation remaining at levels seen in July, which would push the monthly benefit payment to its highest level since 1981 according to a prediction by the non-profit Committee for a Responsible Federal Budget (CRFB).
That eventuality is still on track given inflation’s historic surge, but comes in slightly lower now due to inflation having cooled slightly over the past 30 days. 1981’s historic COLA rise hit 11.2%.
“There are only two months of consumer price data left to go before the Social Security Administration unveils the COLA: August and September. Last year, it made the announcement on Oct. 13,” the column reads. “Along with that higher monthly check comes a slight drop in Medicare costs: The average basic monthly premium for standard Medicare Part D coverage is slated to notch down 1.8%, according to a release from the Centers for Medicare and Medicaid Services.”
Part B premiums are also expected to see a decline, the column notes.
Most reverse mortgage originators seem to agree that the COLA makes for a welcome adjustment to their clients’ pocketbooks but may not have an abundance of impact in terms of their continuing need for the product, according to previous outreach conducted by RMD.
Since Social Security can frequently be the only source of income for a segment of seniors, there are some concerns that borrowers could have to face beyond just incorporating the COLA into their benefits.
Read the column at Money.com.