Social Security recipients could see a blockbuster increase in their benefits next year, analysts predict. As Americans grappled with inflation, the cost of living adjustment, or COLA, for 2022 was the biggest in nearly 40 years. Payments rose by 5.9% in January — or about $93 a month, taking the average monthly payment to $1,657.
But by June the US Bureau of Labor Statistics had announced that the Consumer Price Index, the year-over-year change in prices consumers pay for goods and services, was already up to 9.1% — far ahead of the adjustment Social Security accounted for.
In July, the CPI dipped slightly, to 8.5%, but that still marked 17 consecutive months that inflation outpaced the 2% target set by the Federal Reserve.
We’re still waiting on the rates for August, which will be released Sept. 13, and September, slated to come out Oct. 13. Not coincidentally, the COLA for 2023 will also be announced in October.
In the weeks before the official announcement, estimates for increases to next year’s Social Security benefits are already emerging.
How much will be in your Social Security check next year? Read on to find out.
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How much will Social Security benefits be in 2023?
The Social Security Administration won’t disclose next year’s cost of living adjustment until October, but many experts expect an even larger increase than in 2022.
Exactly how much of one, though, is hard to tell: In May, the Senior Citizens League estimated it would be 8.6%, based on inflation at that point. The league has shifted its forecast since then. If inflation remains constant, the group projected, the COLA could be around 9.6%, or roughly $160 more a month per check.
If inflation bubbles back up, the league predicted, benefits could increase by as much as 10.1%. If it cools down, though, the adjustment would be closer to 9.3%.
In June, the nonpartisan Committee for a Responsible Federal Budget estimated Social Security would add as much as 10.8% to account for inflation, or between $130 and $180 a month more for the nearly 70 million Americans on Social Security.
In July, the organization’s senior policy director, Marc Goldwein, tweeted that if inflation remained on its current trajectory, the increase would be 11.4%, even higher than the record set in 1981, when benefits rose 11.2%. Inflation has cooled somewhat since Goldwein’s prognostication, though consumer prices are still high.
If inflation doesn’t increase at all through the start of fiscal 2023 in October, Josh Gordon, CRFB’s director of health policy, predicts a COLA increase of about 8.9%. If things continue on trend, though, he expects an increase of 9.9%.
In an Aug. 30 Marketwatch column, Munnell predicted the boost would be 8.9% on the lowest end and 9.5% on the upper end — either of which would be the largest since 1981.
A 9% cost-of-living adjustment to Social Security in 2023 would add $150 to monthly checks, on average, or an additional $1,800 a year. Alicia H. Munnell, director of Boston College’s Center for Retirement Research, says it’s “highly likely” benefits will increase by more than that.
Separate from any COLA increase, a bill before Congress could see Social Security recipients getting an additional $2,400 a year in 2023. Introduced by Rep. Peter DeFazio and Sen. Bernie Sanders, the Social Security Expansion Act would add $200 to each monthly check for anyone currently receiving benefits or who will turn 62 next year.
The measure hasn’t moved forward since it was introduced in June, however.
When will I know what my Social Security benefits are for 2023?
The Bureau of Labor Statistics is scheduled to announce inflation data for September on Oct. 13, and the Social Security Administration typically announces the cost-of-living adjustment issues soon after.
Beneficiaries should then receive letters detailing their specific benefit rate in December. If you miss this letter, you can still verify your increase online via the My Social Security website.
The COLA goes into effect with December benefits, which appear in checks received in January 2023.
Social Security payments are made on Wednesdays, following a rollout schedule based on the beneficiary’s birth date: If you were born from the 1st through the 10th of the month, your benefits are paid on the second Wednesday of the month.
If your birthday falls between the 11th and 20th of the month, your checks are paid on the third Wednesday, and you’ll see your first COLA increase on your Jan. 18 check.
Those born between the 21st and the end of the month receive benefits on the fourth Wednesday, which, in 2023, is Jan. 25.
How does this year’s Social Security increase compare to inflation?
Though the 5.9% bump in January 2022 was the highest in 40 years, it already hasn’t kept pace with inflation for the year. The Bureau of Labor Statistics announced the consumer price index rose 9.1% between June 2021 and June 2022.
In July 2022, it was still up, but only by 8.5% over July 2021.
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