The latest consumer price index for June is increasing at its fastest pace since 1981. Inflation has risen 9.1% from one year ago and was higher than the 8.8% increase estimated by Dow Jones.
One consequence of these inflationary pressures is a potential increase in the cost of living adjustment (COLA) for Social Security beneficiaries in 2023. The Senior Citizens League, a non-partisan group, now estimates the cost of living adjustment to be 10.5% next year. In dollar terms, this would come to a $175.10 increase to the average monthly retirement benefit of $1,668.
Recommended For You
Back in May, which seems like a long time ago at this point, when inflation data came in higher than expected, The Senior Citizens League had estimated COLA to rise 8.6% for next year.
The Social Security Administration calculates the annual adjustment by taking an average of the third-quarter data from the current year and comparing it with the third quarter from the previous year. The actual increase for next year may vary depending on how high inflation is in the coming months.
"Looking ahead, there are a number of reasons why we expect those high prices to ease over the coming months," White House press secretary Karine Jean-Pierre said at a press briefing this week.
If falling gas prices fall at a consistent rate, and the rate of inflation slows down in the coming months, and is lower than the recent average, the COLA could be 9.8%, according to The Senior Citizens League. If instead it runs hot or higher than the recent average, the increase to benefits could be 11.4%.
In 2022, Social Security beneficiaries received a record 5.9% boost to benefits, the highest increase in about 40 years. Inflation has only increased since then.
The flipside is that a higher COLA for 2023 may force higher-income earners to pay more for Medicare Part B and Part D benefits. Also, lower income beneficiaries may see cuts to income-related benefits as their monthly payments increase.
Media reports say that a record high Social Security COLA for 2023 would also impact Social Security's projected depletion dates, according to the Committee for a Responsible Federal Budget.
The annual Social Security trustees report released in June projected the program's combined funds will be depleted in 2035, at which point 80% of benefits will be payable. That is based on data through mid-February.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
