With inflation still rampant in the United States following the extended lockdowns and Russia’s invasion of Ukraine, Social Security’s cost-of-living-adjustment (COLA), is set to be pushed to its highest level since the 1980s.
This could have wider ramifications for those who depend on Social Security checks, with next month’s deliberation expected to pave the way for over a 9pc increase from the the average monthly benefit of 1,624 dollars in July 2022.
The date for the 2023 COLA announcement is likely to be October 13, 2022 with the third-quarter data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) the two main metrics used to determine the final amount.
According to a report from the Senior Citizens League, COLA for the year 2023 is estimated to be 9.6 percent. The report also predicts that the range could be as low as 9.3% and as high as 10.1pc.
“A high COLA will be eagerly anticipated to address an ongoing shortfall in benefits that Social Security beneficiaries are experiencing in 2022 as inflation runs higher than their 5.9 percent COLA,” the report reads.
“Based on inflation through July, we calculate that a 1,656 dollars benefit is short about 58 dollars per month on average and by a total of 373.80 dollars year to date.”
Impact of the COLA change:
With the change set to impact the lives of over 63 million beneficiaries here are some of the things to keep in mind ahead of the announcement
1. Historic Highs
According to Mary Johnson who spoke to the Detroit Free Press, a policy analyst at the nonprofit Senior Citizens League, the incoming increase could be be “one of the highest COLAs ever paid in the history of the program.”
2. The rich are set to pay more
With only 6pc of the US labor force earning more than 147,000 dollars, those earning higher incomes will see a rise in their maximum taxable wages cap.
3. Rich retirees set to benefit
Those high earners who have accumulated their wealth over a long period of time are on track to receive a greater monthly payment.