Social Security benefits will likely see a nearly double-digit cost-of-living adjustment (COLA) in 2023. The largest increase since 1981, when the Social Security Administration (SSA) gave a boost of 11.2 percent.
The inflation gauge used by the SSA to set the annual COLA came in at 9.1 percent for July. The inflation numbers in the months of August and September will also be used in the final calculation of COLA, which will be announced in October. Any increase in benefits would take effect in January 2023.
However, inflation rates, based on the Consumer Price Index (CPI) is not an honest calculation. The CPI is always manipulated downward, as I explained in a previous post.
A 9 percent COLA would boost the average Social Security retirement benefit by about $150 a month in 2023.
Economist Bill McBride, in his Calculated Risk blog, estimates a range of 8.5 percent to 9 percent for COLA next year.
Josh Gordon, director of health policy for the Committee for a Responsible Federal Budget, a nonpartisan fiscal policy think tank, predicted 9.9 percent “if things continue on trend,” but says the COLA could be around 8.9 percent “if we had no more inflation for the rest of the year.”
The rise in COLA won’t translate to all the increase in money being reflected in Social Security checks received by the 70 percent who have Part B Medicare premiums deducted directly from their benefit payments.
Medicare Part B premiums will increase in 2023. Medicare typically reveals the following year’s premium prices in October, around the time the SSA announces the new COLA.
The worse news is Social Security is expected to run out of money by 2035. If changes aren’t made to prevent that from happening, it’s likely benefit payments would be reduced by 20 percent, to match what the SSA receives from those still working.
Personally, I believe the prevention tactic to keep Social Security funded in the future will be to raise the retirement eligibility age from the current 62, and increase the percentage taken from paychecks of those still working.
Disclaimer: On January 4, 2016, the owner of WestEastonPA.com began serving on the West Easton Council following an election. Postings and all content found on this website are the opinions of Matthew A. Dees and may not necessarily represent the opinion of the governing body for The Borough of West Easton.
