How High Social Security COLA Could Soar in 2023 if Inflation Continues To Dominate Economy
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The Social Security cost-of-living adjustment (COLA) for 2022 was 5.9%, the highest in 40 years. Now, some experts say that the COLA for 2023 could be even higher to make up for inflation.
See: Social Security: You Can Stop Working and Delay Your Benefits To Earn More Later Find: 7 Reasons You Might Not Receive Social Security Benefits
The Senior Citizens League, a non-partisan senior advocacy group, says that the 2023 COLA could be as high as 7.6% based on the latest data from the consumer price index, CNBC reported.
The consumer price index for all urban consumers (CPI-U) rose 7.9% from a year ago, the highest hike since 1982. Indexes for gasoline, shelter and food were the largest contributors to the seasonally adjusted increase.
Social Security COLA is calculated based on the consumer price index for urban wage earners and clerical workers (CPI-W). According to the U.S. Bureau of Labor Statistics, the CPI-W measures hows retail prices affect urban hourly wage earners and clerical workers, CNBC noted.
While the 5.9% increase could seem generous, it might not do much to help seniors maintain their standard of living, per The Motley Fool. The CPI-W may weigh some expenses too heavily, such as entertainment costs, and may not weigh certain things that seniors are more likely to spend on — like healthcare and housing — heavily enough.
Per The Motley Fool, the Senior Citizens League estimates that benefits have lost about 30% of their buying power since 2000.
The average retiree benefit is around $1,564, according to The Senior Citizens League. However, the benefit would need to be $1,698.50 to keep up with an 8.6% increase in the CPI-W as of February. This is a shortfall of $107.90 in potential benefits.
Learn: 10 Reasons You Should Claim Social Security Early Explore: Social Security: How To Appeal if Your Application for Disability Insurance Is Denied
Next year’s COLA will depend largely on inflation — however, the Federal Reserve hopes to curb rising prices by raising interest rates this year.
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This article originally appeared on GOBankingRates.com: How High Social Security COLA Could Soar in 2023 if Inflation Continues To Dominate Economy
