Social Security recipients are to receive $159 extra per month by 2023, according to the Senior Citizens League, a non-partisan advocacy group.
The average benefit payment for the beneficiaries will be $1656 in 2022.
The Social Security cost-of-living adjustment (COLA) will be calculated using inflation readings from July, August and September by the Social Security Administration.
As experts say 9.6% was the peak of inflation in July, the CPI numbers for the next two months still seem higher than in the previous year if the current estimate holds. Consumer prices remained at 40-year highs for most of 2022.
The high inflation rate has significantly impacted people with fixed incomes. The price changes have not accounted for the benefits of social security.
The social security recipients mainly depended on government assistance for their living. They were disappointed when the 5.9% cost-of-living adjustment fell short of matching the June 9.6% inflation rate.
However, the announcement of the most significant increase in monthly benefits has brought some hope to the senior citizens of the United States.
Social Security monthly benefits adjustment
The Social Security Administration (SSA) uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to determine the annual cost-of-living adjustment (COLA).
The CPI-W is calculated by the U.S. Bureau of Labor Statistics and is based on the prices of goods and services that urban workers typically purchase.
The SSA uses the CPI-W to calculate the COLA because this index more accurately reflects the spending patterns of older Americans, who are more likely to rely on Social Security benefits as a significant source of income.
The CPI-W is released by the Bureau of Labor Statistics every month. The SSA will use the CPI-W for July, August, and September to calculate the COLA for the following year. For example, the SSA will use the CPI-W for July, August, and September 2022 to calculate the COLA for 2023.
What is COLA?
COLA is the Cost-of-Living Adjustment to the social security monthly benefits, an annual adjustment to account for the cost of living changes.
The COLA is useful to adjust Social Security and other government benefits, such as veterans’ and federal pensions. The COLA is also used to adjust Social Security Disability Insurance (SSDI) benefits and Supplemental Security Income (SSI)
Fact sheet of the Social Security COLA 2023
- An increase of 5.9% in the Social Security COLA will add a monthly average retiree benefit of about $159, accounting for a $1,900 annual raise.
- Social Security Payments could be boosted by 9.3% to 10.1% due to the Annual Cost of Living Adjustment (COLA). Highest COLA since 1981.
- A person who collects the highest possible monthly benefit of $4,194 would receive an extra $402.62 in monthly social security checks.
- The Senior Citizens League evaluates that despite recent changes, Social Security benefits are still not keeping up with the cost of living.
- A report shows the ongoing shortfall of $58 to the annual benefits of $1656 is still a concern among retirees.
- For most social security beneficiaries, the coming increase will still fall short of what recipients need to catch up with higher prices for food and other consumer goods.
- The Alzheimer’s drug Aduhelm is responsible for the 14.5% hike in Medicare Part B premiums, which covers doctor visits, outpatient care, and prescription drugs. Because of the plan’s coverage of Aduhelm, the premium cost in Medicare is soaring, as remarked by the medicare policy analyst Mary Johnson.
- After the September inflation data is released, the Social Security Administration will announce the COLA for 2023 on October 13, according to Mary Johnson, Social Security and Medicare policy analyst at the Senior Citizens League.
Social Security is a government-sponsored program that provides retirement and other benefits like disability insurance and death and survivor benefits.
The program’s benefits are based on a percentage of a worker’s wages earned over a lifetime. Today, about 65 million Americans benefit from the Social Security program.
However, Social security has never been structured to be a single source of income for retirees. This arrangement is offered as a supplement towards retirement needs with the assumption that the seniors will have other investments such as bonds, stocks, ROTH IRA, 401(k), and so forth to support their expenses and medical care.