Seniors and others who depend on Social Security benefits could see their next cost-of-living adjustment since 1981 next year, with an advocacy group for older Americans predicting an increase of 8.6%.
The typical monthly Social Security check is about $ 1,658, which means that beneficiaries could see an increase of $ 142.60 a month in early 2023, which will raise the average check to about $ 1,800, according to a new Elderly League forecast.
This projection is based on the latest U.S. inflation figures, including the government’s release on Wednesday of April consumer price index data, said Mary Johnson, a Social Security and Medicare policy analyst at group. The CPI, a broad basket of goods and services, rose 8.3% in April compared to a year agoslightly below an annual increase of 8.5% in March.
The Social Security cost of living adjustment, or COLA, is based on a slightly different basket of goods and services that is also monitored by the government: the consumer price index for urban wage earners and laborers (CPI-W). This basket shows that inflation is slightly higher than the broader price index, with an increase in the CPI-W of 8.9% in April compared to a year ago, according to government data.
An 8.6% increase in monthly Social Security checks could alleviate millions of seniors struggling to keep up with the rising costs of everything from gas to groceries. The 69 million Americans receiving Social Security received a COLA increase of 5.9% in January – the biggest rise since 1982. But inflation has risen well above this figure in 2022, eroding the purchasing power of many older people.
“Even that [5.9% increase] it’s not up to date with the current inflation rate, and that’s what’s really hard when you’re trying to live on a fixed income,” Johnson told. “We are in some extreme circumstances.”
The Social Security Administration will establish the COLA 2023 in October based on the inflation data for the previous three months, which means that the real increase in rates could be slightly different from the forecast of the League of the Elderly. Johnson last year predicted a 6.1% increase in COLAwhile the real momentum was 5.9%.
But there is a caveat about getting a big increase in COLA: much of the impact could be consumed through increases in Medicare premiums, which typically also increase each year.
For example, the standard cost of Medicare Part B increased 14.5% to $ 170.10 a month from 2022, an increase of $ 21.60, according to the Medicare and Medicaid Service Centers. In the end, many seniors saw how part of their 2022 COLA increase had been swallowed up by Medicare’s higher costs.
More food pantries and food stamps
COLA increases in 1980 and 1981 — 14.3% and 11.2%, respectively — reflected the two largest increases since 1975, according to the Social Security Administration. Prior to that, the rising cost of living was set by law, rather than based on the inflation rate.
Johnson noted that the purchasing power of Social Security payments has eroded 40% since 2000, in part because increases are out of date with inflation. His group wants the Social Security Administration to base COLA’s annual increases on an index better suited to the elderly, the consumer price index for the elderly, which gives more weight to costs such as health care is often a major expense for older Americans.
More seniors trust food banks and food stamps as their purchasing power erodes, and group surveys found that 45% of respondents in January reported relying on these resources to insure food, double the rate in October.
“It’s pretty unfortunate,” Johnson said. “That’s where I want to cry.”
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