How high social security COLA could increase in 2023 if inflation continues to dominate the economy
How high social security COLA could increase in 2023 if inflation continues to dominate the economy

How high social security COLA could increase in 2023 if inflation continues to dominate the economy


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That Social Security The cost of living adjustment (COLA) for 2022 was 5.9%, the highest in 40 years. Now some experts say so COLA for 2023 could be even higher to compensate for inflation.

See: Social Security: You can stop working and delay your benefits to earn more later
Find: 7 reasons why you may not receive social benefits

The Senior Citizens League, a non-partisan senior advocacy group, says that by 2023 COLA could be as high as 7.6% based on the latest data from the Consumer Price Index, CNBC reported.

The consumer price index for all urban consumers (CPI-U) rose 7.9% from a year ago, the highest increase since 1982. Indices for petrol, shelter and food were the largest contributors to the seasonally adjusted increase.

Social Security COLA is calculated on the basis of the consumer price index for urban and office workers (CPI-W). According to the U.S. Bureau of Labor Statistics, CPI-W measures how retail prices affect hourly wage earners in cities and office workers, CNBC noted.

While the 5.9% increase might seem generous, it may not do much to help seniors maintain their standard of living, according to The Motley Fool. The CPI-W may weigh some expenses too heavily, such as entertainment costs, and may not weigh certain things that seniors are more likely to spend on – such as health care and housing – heavily enough.

According to The Motley Fool, the Senior Citizens League estimates that benefits have lost about 30% of their purchasing power since 2000.

The average retirement benefit is around $ 1,564, according to The Senior Citizens League. However, the benefit must be $ 1,698.50 to keep pace with a 8.6% increase in the CPI-W from February. This is a shortfall of $ 107.90 in potential benefits.

Learn: 10 Reasons Why You Should Require Social Security Early
Explore: Social insurance: How to appeal if your application for disability insurance is rejected

The official COLA for 2022 will be set by the Social Security Administration in October. Next year’s COLA will largely depend on inflation However, the Federal Reserve hopes to curb rising prices by raising interest rates this year.

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About the author

Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England, but is now based in Ohio, where she attended Ohio State University and lives with her two young children and fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.


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