- The Senior Citizens League predicts seniors will get $1,900 more from Social Security payments next year.
- That’s because of an adjustment in the cost of living based on inflation, which has risen this year.
- It will likely be the biggest COLA modification since 1981.
Inflation has hurt Americans at the grocery store and gas station, even driving many into debt. It poses a particular problem for retirees as it puts 401k at risk and causes their credit card bills to soar.
But there’s probably a bright side for older Americans — and other households receiving Social Security benefits — next year.
That’s because experts predict a significant increase in the cost of living adjustment in 2023, about $1,900 for the typical recipient, to keep up with inflation.
The Social Security Administration calculates its annual cost-of-living adjustment based on inflation data from July, August, and September, and announces the official number in October of any given year. The Senior Citizens League estimates next year’s increase will be an average monthly increase of 9.6%, based on inflation data from this summer. If inflation continues to decline, the researchers found, older Americans may find some relief from the benefits gap that has hit them in recent months, as prices have skyrocketed.
The COLA period isn’t quite over yet, with inflation data for August and September yet to be released, so the Senior Citizens League is basing its forecasts on consumer price index data using July numbers. If inflation is above the recent average, the group estimates, COLA could be 10.1%; if it’s lower than the recent average, it could be 9.3%. Nevertheless, even a conservative projection puts next year’s adjustment at the highest since 1981, when the US was in recession.
The average monthly benefit in 2022 was $1,656, and based on that, a 9.6% increase would mean a monthly gain of about $159 or $1,900 per year, the unbiased group said.
“A high COLA is eagerly anticipated to address an ongoing benefit shortfall experienced by Social Security beneficiaries in 2022 as inflation exceeds their 5.9% COLA,” said Mary Johnson, policy analyst social security and health care at the Senior Citizens League, in a press release.
Inflation outlook is rising, but prices are still high
Inflation cooled in July as gasoline prices fell, but inflation remains high, with consumer prices rising 8.5% from a year ago. And not all items are clear; the CPI food price index rose 1.1% over the month in July, growing from a 1% increase in June. Grocery shopping grew 1.3%, also faster than the previous month’s pace. While futures for some food commodities such as wheat and corn have fallen since last month, the latest CPI report suggests that food costs will not fall as quickly as gas prices.
And high prices have proven unaffordable for those on a fixed income, especially older Americans. More than 40% of Americans age 60 and older depend solely on Social Security for income, according to a 2020 survey from the National Institute on Retirement Security. And credit card debt is an indicator of where older Americans have turned to pay for their expenses — people over 70 collectively had $380 billion in credit card debt as of April, more than three times the amount they were in 2010 when they were in debt. $110 billion.
“Credit card debt in retirement can quickly spiral out of control, and this is especially true during periods when interest rates are rising,” Johnson said in a statement earlier this year.
The Senior Citizens League said it expects the Social Security Administration to announce next year’s COLA on Oct. 13, after September inflation data has been confirmed.