When will the Social Security Administration announce the 2023 COLA increase?
Last year saw a 5.9% increase for benefits recipients, but experts are expecting an even greater rise for the 2023 payments.
Inflation has risen at a rapid pace in 2022 as the economy rebounds from the pandemic while adjusting to the ongoing Russian invasion of Ukraine.
Although millions of households across the country are experiencing the pain of higher prices right now, for Social Security beneficiaries that high inflation may also translate into another substantial increase in benefits.
Every year the Social Security Administration alters its monthly benefit payments using the annual Cost-Of-Living-Adjustment (COLA). Social Security benefits are one of the few types of incomes retirees receive that is adjusted for inflation.
The COLA increase is based on the data provided in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the third quarter of the year; July, August and September. The August data will be published on Tuesday, 13 September.
Last year the US Bureau of Labor Statistics released the Consumer Price Index data for September on 13 October and announced the COLA boost the same day. If the agency sticks to that timeframe this year, we can expect the 2023 COLA to be confirmed somewhere around Thursday, 13 October 2022. Some experts suggest that the COLA increase could be as much as 10.5%.
“I think somewhere in the 9% range is probably a reasonable guess,” says Richard Johnson, director of the retirement policy program at the Urban Institute, a Washington, D.C.-based research organization.
“It’s hard to predict exactly how, in particular, energy prices are going to evolve over the next few months. I think that’s probably the big uncertainty.”
How is the COLA calculated?
The change in Social Security benefits, the COLA, is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) published monthly by the US Bureau of Labor Statistics. The Social Security Administration uses the monthly average from the third quarter (July, August, and September) to compare to the same period the year before. For now it is difficult to know how high the boost will be, but experts do expect an increase on last year’s figure.
Last month David Certner, director of legislative policy for government affairs at AARP, explained that a large increase could be on the cards:
“It’s not possible to be precise until we see the data for the next two months, but it’s probably safe to say at this point we can expect a COLA in the 8 to 10 percent range.”