Social Security calculator: how to estimate my benefits with COLA increase in 2023?
With the SSA announcing an 8.7 percent COLA, many are wondering how to calculate their new benefit amount. We will talk you through the process.
In December, Social Security beneficiaries will receive a letter from the Social Security Adminstration (SSA) with information on their 2023 benefit amount, taking into account the 2023 COLA.
The COLA, or Cost-of-living adjustment, applied to benefits starting in January, was announced to be 8.7 percent.
In order to calculate your benefit amount, you multiply 1.087 by your current benefit amount. For instance, if your monthly payment is $1,200, we would multiply that figure by 1.087, which equals $1,304, an increase of $104.
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How much will the average monthly payment increase?
The average Social Security benefit sent in September 2022 was 1,673.88. Given the 2023 COLA increase of 8.7 percent, the average benefit could reach $1,819 in January.
For those who receive Social Security Disability Insurance, the average monthly payment was $1,232.11, which will be bumped up to $1,339.30.
Bernie Sanders proposes Consumer Price Index specific for seniors
To better understand the ways in which changes in consumer prices impact purchasing power, Senator Bernie Sanders has proposed a Consumer Price Index that weighs goods typically consumed by seniors. This new index would provide the federal government with a better picture of the financial situation of those receiving federal retirement benefits.
The bill would establish a Consumer Price Index for the Elderly (CPI-E) that “would more accurately measure spending patterns of seniors” by reflecting “what seniors spend a disproportionate amount of their income on such as health care and prescription drugs.” This would protect the purchasing power of seniors to ensure that their benefits keep up with the prices of goods they consume more frequently. The Senior Citizens League reported recently that since the early 2000s, those on Social Security have lost forty percent of their purchasing power.
Mary Johnson, a researcher with the senior rights organization, said that the cut represents “the “deepest loss in buying power since the beginning of this study by The Senior Citizens League in 2010.” To uncover this figure, Johnson and her team tracked the prices of thirty-seven goods commonly consumed by seniors and found that their prices had outpaced benefits in a very significant way. Creating a special index for these goods, as has been proposed on Capitol Hill, could really help those living on a fixed income.