Many retirees could get an extra $1,900 next year thanks to inflation's impact on Social Security. It would be the highest cost of living adjustment in 30 years.
- The Senior Citizens League projects that senior citizens will get $1,900 more next year from Social Security payments.
- That's due to a cost-of-living adjustment based on inflation, which has surged this year.
Inflation has been hurting Americans at the grocery store and at the gas pump, and it's even driving many into debt. It's posing a particular problem for retirees, as it endangers 401ks and causes their credit card bills to surge.
But there's likely a bright side for older Americans — and other households who receive Social Security payments — next year.
That's because experts predict a significant increase for cost-of-living adjustment in 2023, around $1,900 for the typical recipient, to keep up with inflation.
The Social Security Administration calculates its yearly cost-of-living adjustment based on inflation data from July, August, and September, announcing the official number in October of a given year. The Senior Citizens League estimates that next year's hike will be an average monthly increase of 9.6%, based on inflation data from this summer. If inflation continues to ease, the researchers found, older Americans may find some relief from the benefits gap that has hit them in recent months, as prices have skyrocketed.
The COLA period isn't quite over yet, with inflation data for August and September yet to be released, so the Senior Citizens League bases its predictions on Consumer Price Index data using July's numbers. If inflation runs higher than the recent average, the group estimated, the COLA could be 10.1%; if it runs lower than the recent average, it could be 9.3%. Nonetheless, even a conservative projection puts next year's adjustment as the highest since 1981, when the US was in a recession.
The average monthly benefit in 2022 was $1,656, and based on that, a 9.6% boost would mean a monthly gain of about $159, or $1,900 per year, the nonpartisan group said.
"A high COLA will be eagerly anticipated to address an ongoing shortfall in benefits that Social Security beneficiaries are experiencing in 2022 as inflation runs higher than their 5.9% COLA," from this year said Mary Johnson, Social Security and Medicare policy analyst at the Senior Citizens League, in a press release.
Inflation prospects are looking up, but prices are still high
Inflation cooled in July as gasoline prices fell, but inflation remains high, with consumer prices up 8.5% from a year ago. And not all items are in the clear; the CPI's food-price gauge rose 1.1% over the month in July, growing from June's 1% gain. Grocery costs climbed 1.3%, also accelerating from the prior month's pace. While futures for some food commodities like wheat and corn have fallen since last month, the latest CPI report suggests food costs won't fall as quickly as gas prices have.
And high prices have proven prohibitive for those on a fixed income, especially older Americans. More than 40% of Americans age 60 and older rely exclusively on Social Security for income, according to a 2020 study by the National Institute on Retirement Security. And credit card debt is an indicator of where older Americans have turned to in order to pay their expenses — people over 70 owed $380 billion collectively in credit card debt as of April, more than three times greater than they did in 2010, when they owed $110 billion.
"Credit card debt in retirement can quickly get out of hand, and this is especially true during periods when interest rates climb," Johnson said in a statement earlier this year.
The Senior Citizens League said it expects the Social Security Administration to announce next year's COLA on October 13, after September inflation data is confirmed.
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