Social Security beneficiaries will be set for tighter checks next year – but that might not be all the wonderful news.
Social Security benefits are calculated each year based on a Cost of Living Adjustment (COLA).
It is tracked based on the Urban Wage Earners and Clerical Workers (CPI-W), which measures changes in the cost of popular goods and services.
In other words, high inflation could result in high Social Security payments.
This year, for example, the average Social Security benefit is $1,657 as COLA is up 5.9 percent.
However, even higher inflation this year could see COLA nearly doubling to as much as 10.8 percent, according to the nonprofit’s Committee on Responsible Federal Budgeting (CRFB).
That would mean the average Social Security benefit would increase by $179 to $1,835 per month.
And since the maximum in 2022 is $4,194, that would mean it would rise by about $453 to $4,647.
How things could change
Now keep in mind that things could change if the inflation rate cools by the end of the year.
Currently, costs are being impacted across the board by the Russia-Ukraine war, supply not meeting demand, and alleged involvement of large companies in price gouging.
Typically, the Social Security Administration announces next year’s COLA in the fall.
At the low end, the CRFB sees the adjustment increase by 7.3 percent.
Over the past 12 months, the CPI-W is up 9.3 percent, according to the latest data from the Bureau of Labor Statistics.
Why a COLA boost is bad
Also, keep in mind that boosted checks aren’t always a good thing.
In fact, the Senior Citizens League said high inflation has reduced the purchasing power of Social Security recipients by 40% since 2000.
Also, TSCL added that “COLAs have increased Social Security benefits by a total of 64%, but typical senior spending has increased by more than double that rate through March 2022 — 130%.”
Ms Johnson told The Sun that the TSCL supports federal legislation that would require a minimum COLA and added an index that better tracks Social Security beneficiaries’ costs.
For example, Medicare Part B premiums, prescription costs and other healthcare expenses are not “fairly” measured by the CPI, Ms Johnson said.
“Senior Citizens League polls have found strong support (around 63% of poll respondents) for providing at least 3% COLA,” she added.
For more related stories, see the differences between SSI and SSDI and how to qualify for both.
Millions of retirees are getting fewer Social Security checks despite the COLA boom.
https://www.the-sun.com/money/5725011/social-security-cola-2023-rise-2/ Millions of Americans will be earning up to $453 a month in Social Security checks over the next year