Another prediction of a historically large Social Security cost of living adjustment for 2023 is out—this one saying it could be as high as 10.8%, which if it were to hold true would represent the biggest adjustment since 1981, when it was 11.2%.
A new analysis from the nonpartisan Committee for a Responsible Federal Budget (CRFB) says that if inflation continues at its current pace (which was 8.6% in May), Social Security beneficiaries could receive a COLA hike of 10.8% starting in January. If there is no inflation for the next 5 months, the group predicts the COLA increase would be 7.3%.
“The actual COLA will likely be somewhere in between, and could be the third- or fourth-highest in history,” CRFB said in a media release Monday.
The Social Security Administration will not determine the actual 2023 COLA until inflation rates are tracked and averaged via the Consumer Price Index in July, August, and September, but the way things are trending an increase north of 8% seems more and more likely.
The Senior Citizens League’s most recent forecast, last updated after the May CPI-W figures were released by the Bureau of Labor Statistics, stands at an 8.6% increase. Stephen Goss, chief actuary at the Social Security Administration, said early this month that a COLA close to 8% is likely based on CPI-W trends so far this year.
The next round of updated 2023 COLA forecasts are expected to be released on July 13, the same day the CPI-W data for June is scheduled to be published.
If CRFB’s high-end forecast of 10.8% ends up being accurate, the average monthly Social Security check would increase by $179 per month, from $1,658 this year to $1,837 in 2023. If inflation moderates some and the 2023 COLA ends up being 8%, beneficiaries would see an increase of $132.64 per month in 2023, bringing the average check to about $1,790 come January.
To put that in perspective, Social Security beneficiaries received a 5.9% COLA increase in 2022—which is the highest inflation adjustment in 40 years and boosted monthly checks by an average of $93. The 2021 COLA was just 1.3%.
CRFB also shared some new projections about Social Security insolvency timelines, based on the latest Trustees Report and inflation and interest rate assumptions.
From the statement: “We estimate that with a COLA of 8.8% in 2023 and 3.0% in 2024 but no other changes, insolvency would move forward from 2035 to 2033. However, nominal wages, output, and interest rates are also likely to be higher than the Trustees project over the next few years. For example, nominal GDP as implied by the recent Fed forecasts would be about 0.5% higher than the Trustees project over the next three years. Generously assuming nominal GDP is 2% above the Trustees projections for the next 15 years and that interest rates remain elevated relative to the Trustees for several years, we project an insolvency date of 2034.”
According to the recently released 2022 report from the Treasury Department’s Social Security Board of Trustees, Social Security will be able to pay scheduled benefits until 2034—one year later than reported last year.
SEE ALSO:
• Latest 2023 Social Security COLA Estimate Holds Steady (and Still Huge)
• Social Security Benefits Lose 40% of Buying Power Since 2000; Latest 2023 COLA Estimate Drops
• Social Security Gains Another Year of Solvency: 2022 Trustees Report
• Bernie Sanders: Expand Social Security; Lindsey Graham: Take Less, Pay More
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
It’s nice the sound of increase, but our supplemental goes up and other things go up, the last time we lost our increase.
Federal Government will find a way to get it. American workers are theirs slaves when working.
. They don’t want you to have benefit only them !