The average Social Security beneficiary might get an extra $1,900 in 2023 to keep up with inflation, according to projections by experts.
This year, many seniors have suffered due to the fact that their 2022 increase, 5.9%, trailed below the 40-year inflation rate. Inflation was blazing hot in July, increasing 8.5% from a year earlier, despite a decrease in fuel costs.
The Social Security Administration bases its annual Cost-of-Living-Adjustment (COLA) adjustment on inflation statistics from July, August, and September, releasing its official increase in mid-October. According to the Senior Citizens League, with statistics now available for one of these three months, seniors might expect an average monthly rise of 9.6%. If inflation continues to decline, older citizens might get a relief in 2023, closing the gap in benefits that many are already suffering. A 9.6% increase, based on the average monthly benefit of $1,656 in 2022, would result in a monthly gain of almost $159 and an annual gain of $1,900, according to the nonpartisan organization.
“A high COLA will be eagerly expected to solve a continuing deficit in payments for Social Security retirees in 2022 when inflation exceeds their 5.9% COLA,” said Mary Johnson, Social Security and Medicare policy analyst at the Senior Citizens League. The Social Security Administration bases its yearly benefits adjustment on a somewhat different index, the Consumer Price Index for Urban Wage Earners and Clerical Employees (CPI-W), a basket of commonly purchased goods and services by urban wage earners and clerical workers.
In July, the CPI-W rose 9.1%, the Labor Department said on Wednesday.
deficit of $58 each month
Certainly, there are still two more months of data to be collected, and the Social Security COLA might wind up being greater or lower depending on the course of inflation in August and September. Johnson said that she estimates a COLA range of 9.3% to 10.1%, with 9.6% being the most plausible given the most recent statistics.
The average monthly benefit for the current year is around $1,656, but this falls short for the typical senior by approximately $58 per month, according to Johnson.
She said that this may cause more elderly to depend on government support programs. About 37% of seniors questioned by the organization in 2021 reported receiving assistance from low-income programs. According to Census statistics, around 16% of older citizens got help depending on their requirements before the epidemic.
“This shows that the pandemic and inflation have prompted a substantial increase in the number of individuals with fixed incomes who rely on these programs to complement their Social Security and Medicare benefits as prices continue to rise,” Johnson remarked.
How costly are Medicare premiums?
The cost-of-living adjustment for Medicare Part B, which covers doctor visits, outpatient care, and certain medicines, increased by 14.5% this year.
The Medicare plan’s inclusion of the pricey and controversial Alzheimer’s medicine Aduhelm led to a significant increase in expenditures. Medicare, however, has said that it would limit the use of Aduhelm, while the drug’s producer has reduced the price.
Johnson said that Part B prices may not rise much in 2023 as a result of these events.