The number of the day? That would be 8.6%—which is the estimated Social Security cost-of-living adjustment for 2023 and also the rate at which inflation has increased in the past year.
U.S. inflation accelerated further in May, with prices rising 8.6% from a year ago for the fastest increase since December 1981, the Bureau of Labor Statistics reported Friday. The consumer price index increased 1.0% last month after gaining 0.3% in April. Core inflation excluding food and energy rose 6%, which was also higher than expected.
Taking the latest Consumer Price Index figures into account, The Senior Citizens League’s Mary Johnson also confirmed that her forecast for next year’s COLA increase remains at 8.6%, which if it holds true would represent the biggest adjustment since 1981, when it was 11.2%.
Automatic benefit increases, also known as cost-of-living adjustments or COLAs, have been in effect since 1975. The highest increase ever was 14.3% in 1980.
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%.
And TSCL’s Johnson, known for her accuracy in predicting the next year’s COLAs, isn’t the only expert predicting an increase north of 8% for 2023.
Stephen Goss, chief actuary at the Social Security Administration, had this to say during a June 2 webinar with the Bipartisan Policy Center on Social Security: “Looking at the CPI-W trends we’re seeing so far this year, it’s likely we’ll have a COLA closer to 8% than to 3.8%.”
The 3.8% figure he refers to comes from last week’s 2022 Social Security Trustees Report, which predicted that the program would boost benefits by 3.8% at the end of 2022. But that projection was made before inflation jumped to its highest level in four decades and Russia’s invasion of Ukraine further boosted prices for fuel and food.
With the average monthly Social Security check clocking in at $1,658, an 8% COLA would mean beneficiaries would see an increase of $132.64 per month in 2023, bringing the average check to about $1,790 come January.
The Social Security Administration will not determine the actual 2023 COLA until inflation rates are tracked in July, August, and September, but the way things are trending an increase north of 8% is seeming more and more likely.
SEE ALSO:
• 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
• 7 Bipartisan Ways to ‘Fix’ Social Security
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.
