Inflation could lead to a 7.6% increase in Social Security benefits next year, the analyst says
Seniors who depend on a steady income from Social Security may feel the financial impact of rising consumer prices as annual inflation exceeds the 2022 Cost of Living Adjustment (COLA). But there is a glimmer of hope for retirees — Social Security paychecks could get a much bigger boost next year.
According to the first estimates of the Senior Citizens League (TSCL), the Social Security COLA 2023 could be up to 7.6%.
“Based on February’s CPI-W data — the CPI used to calculate the Social Security COLA — I’m estimating a 7.6% COLA for 2023,” said TSCL policy analyst Mary Johnson. “However, it’s still six months before we get the final announcement in October, and that estimate will change before then.”
As Johnson noted, the CPI-W (Consumer Price Index for urban wage earners and office workers) rose 8.6% annually in February Federal Office for Labor Statistics (BLS). Consequently, the 5.9% COLA top-up for 2022 could be insufficient for beneficiaries currently facing a much higher rate of inflation.
Read on to learn more about the Social Security COLA 2023 Predictions. And if you’re looking for ways to cut your spending this year, you might consider paying off higher-interest debt with a fixed-rate personal loan. You can visit Credible to compare debt consolidation deals for free without hurting your credit score.
INCREASE IN SOCIAL SECURITY PAYMENTS CAN BE BALANCED BY THESE 5 EXPENSES
What you should know about the 2023 Social Security COLA Forecast
The Social Security Administration (SSA) calculates the cost of living adjustment based on CPI-W inflation data. Even though the current CPI-W puts inflation at an 8.6% annual rate, Johnson said, “It’s really early to call about COLA, especially at a time when we’re getting one unexpected message after another.”
A potential performance increase of 7.6% may seem significant, but it’s not uncommon. The highest COLA boost ever recorded was 14.3% in 1980. The SSA reports. And this was a result of the 12.4% increase in CPI-W in 1979, according to BLS.
In 2022, the Social Security adjustment was 5.9% — the largest increase in 40 years, but well below the current annual inflation rate of 7.9%. And with sharp increases in gas prices and energy costs fueled by the Russian invasion of Ukraine, inflation is likely to rise and surpass the 2022 COLA even further.
If you’re struggling to balance your household budget amid high inflation, it may be possible to lower your monthly debt payments with a personal loan. You can learn more about debt consolidation by visiting Credible.
Veterans Borrowing VA Loans at a Record Pace, Study Shows
TSCL: Inflation could ‘further erode the purchasing power of Social Security’
Cost-of-living adjustments are designed to protect the value of Social Security payments over time. However, since 2000, social security benefits have lost almost a third (32%) of their purchasing power a recent TSCL report.
“Even worse, it appears that inflation is not done with us and will continue to erode the purchasing power of Social Security benefits into 2022,” Johnson said in a statement.
Johnson argued that the consumer price data used to calculate COLAs accounted for some rising costs unique to Social Security recipients, such as B. health care, not adequately considered. While monthly benefits have increased 55% over the past 21 years, healthcare costs have increased 145% over the same period, she said.
The average monthly benefit increased by just $92 as a result of COLA 2022, TSCL reported. The group said it recently received hundreds of emails from “many retired and disabled senders describing the dire situations they find themselves in as rapidly rising inflation makes it impossible to pay the bills”.
If inflation has been making it difficult for you to keep up with mounting debt payments, you might consider meeting with a nonprofit credit counseling agency. Debt counselors may be able to help you manage your debt and negotiate with creditors on your behalf.
Alternatively, you can consider consolidating your debt into a fixed rate personal loan. Applicants with good credit can potentially save thousands in interest charges through credit card consolidation. You can browse the current interest rates in the table below and on Credible’s online financial marketplace.
WILL GETTING THE COVID-19 VACCINE AFFECT YOUR LIFE INSURANCE POLICY?
Do you have a financial question but don’t know who to contact? Email The Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert section.