The cost of living in social security is likely to rise again thanks to inflation
The cost of living in social security is likely to rise again thanks to inflation

The cost of living in social security is likely to rise again thanks to inflation

Social security recipients are heading for another major increase in the cost of living in 2023.

The latest estimate for the bump is 8.9%. The estimate comes from The Senior Citizens League, an advocacy group, according to Money.

It would be the largest increase since 1981 and the fourth-highest since Congress implemented automatic cost-of-living increases in 1975, Money said. Social security recipients received 5.9% increase in the cost of living in 2022, the largest in decades.

On the surface, the rise may seem like welcome news, but the reality is more complicated, according to The Motley Fool. The increase in the cost of living is directly linked to inflation, and this is what is driving the large increases.

The increases are intended to help seniors and other social security recipients keep pace with rising prices, but the increases will not come until next year, even though inflation is high now. The Social Security Administration typically announces the annual increase in the cost of living in October, and it takes effect in January.

The delay is causing problems for recipients who are struggling with higher prices now, according to The Motley Fool.

And if inflation declines later this year, next year’s increase in the cost of living may be smaller, even though recipients have already had higher costs.

Seniors just doing well are hardest hit by rising inflation, The Motley Fool noted. They may not have the flexibility in their budgets to manage higher costs for several months before the increase comes.

And even if the recipients get a significant increase in 2023, it is likely to be wiped out by increased housing costs. Medicare spending has also risen steadily, further eroding the ability of cost-of-living bulges to help recipients keep up with rising prices elsewhere, according to Fool.

Prior to last year’s increase, beneficiaries had been dealing with many years of much smaller increases. Three times since 2010, recipients have not received any bumps at all thanks to low inflation. The increase in the cost of living in 2021 was only 1.3%.

Leave a Reply

Your email address will not be published.