The COLA, adjustment of the cost of living, is calculated in October. It could be as high as 9%, which is the largest increase in benefits since 1981.
GREENSBORO, NC – When you hear the word COLA, you probably think of some type of soda. But COLA is the cost of living adjustment by the government. Spoiler alert, the COLA could go up and that could mean a raise for every Social Security beneficiary.
When the government reported that annual inflation fell from 9.1 to 8.5% in July, there was a sigh of relief. But many Americans, especially retirees living on a fixed income, still struggle with high prices. Here’s why: The Social Security Administration calculates annual cost-of-living adjustments, or “COLA,” by looking at the inflation data from the third quarter of the previous year and comparing it to the figures from the third quarter of the current year, so they determine the increase for the following year.
The COLA calculated for 2022 was 5.9%, but with prices rising 8.5% in total, you can see why so many are facing a deficit.
“There may be a glimmer of hope. While we only have one month of data for the third quarter of this year, they are already showing a big increase from last year. When the Social Security Administration announces COLA for 2023 in mid-October, it would be could be over 9%, which would be the biggest increase since 1981,” said Jill Schlessinger, CBS News Business Analyst.
The way it could shake out in real life looks like this: A monthly payment of $1,600 in 2022 would turn into $1,744.
If, as expected, inflation falls this year and next, Social Security recipients will be allowed to keep the higher COLA amount, and that should help them replenish their savings next year.
Correspondent: Jill Schlesinger/Producer: Chris Stein