What will the Social Security COLA be for 2023? Predictions and estimates
The Social Security COLA will not be released until October, but if inflation continues at its current pace, beneficiaries could see a 7 percent increase.
Those who depend on Social Security benefits are being hit especially hard by inflation. While, the historic 5.9 percent COLA increase announced last year has helped but inflation has continued to undermine the boost in payments that began in January.
Based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), used to determine the COLA each year has tracked significant increases in prices since the 2023 increase was announced.
Based on our calculations, if the COLA were to be announced based on the increases seen between October and May would land beneficiaries with a 6.9 percent increase to their benefit amounts. Considering that it is the CPI-W for July, August, and September, the number will likely be higher than seven percent. Inflation increased one percent in May and there are no signs that price increases are going to slow anytime soon. To combat inflation, the US Central Bank, the Federal Reserve, has increased interest rates to slow the flow of money throughout the economy.
The Senior Citizens League (SCL) has released a new reports that shows that purchasing power for seniors has fall by thirty percent between March 2021 and March 2022.
This figure was identified by tracking price increase across thirty-seven goods and services that are typically consumed by seniors. In addition, the 14.5 increase in the premium for Medicare Part B has also cut benefit amounts significantly.
The organization Justice in Aging has also stated that around forty-five percent of people over the age of sixty-five have trouble meeting their basic needs. These rates are reaching those that led the federal government to pass the Social Security Act in the mid-20th century.
How is the COLA calculated?
Using the CPI-W the Social Security Administration averages the increase tracked between July and September. Then this is compared to the rate seen in October of the previous year. Last year that figure came out to 5.9 percent.
The Social Security Expansion Act, which is circulating on Capitol Hill would create a new Consumer Price Index that looks specifically at goods consumed by seniors. This would help to tabulate a more specific index that could support more precise increases.
However, the group of leaders supporting the bill know that seniors need to see increases in their base payment as well. Vermont Senator Bernie Sanders has said that the bill would be able to increase benefits by $2,400 without increasing taxes on ninety-three percent of workers or raising the national deficit.
“It is absurd that a billionaire in America today pays the same amount of Social Security taxes as someone making $147,000 a year. It is time to scrap the cap, expand benefits, and fully fund Social Security,” said Senator Sanders.