Retirees on Social Security could see monthly benefit rise average $159 in 2023 due to inflation, estimate finds

Personal Finance

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New government data points to signs that red-hot inflation is starting to cool. But Social Security beneficiaries may still be in for a record high cost-of-living adjustment in 2023.

The Senior Citizens League, a nonpartisan senior group, now estimates Social Security benefits may increase 9.6%, based on Consumer Price Index data released on Wednesday.

That would amount to an extra $158.98 per month for the average retiree benefit of $1,656, according to the group’s calculations.

In comparison, The Senior Citizens League had predicted a 10.5% cost-of-living adjustment last month based on hotter than expected CPI data.

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The Consumer Price Index , which measures changes in prices for goods and services, rose 8.5% in July over a year ago, a slower pace from previous months as gas prices fell.

A subset of that index, the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, that is used to calculate Social Security’s annual cost-of-living adjustment, increased 9.1% in July over the previous 12 months.

The COLA estimate is still preliminary

To be sure, The Senior Citizens League’s estimate is still preliminary. The Social Security Administration calculates the annual cost-of-living adjustment by determining the percentage change in the CPI-W from the third quarter of the current year to the average from the third quarter of the previous year.

There are still two months of data to go before the official COLA for next year is announced.

Gas prices are one of the big drivers of the CPI-W, according to Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League. Fluctuations in gas prices in the coming two months could affect the final Social Security cost-of-living adjustment calculation.

Still, Social Security beneficiaries can still expect a record cost-of-living adjustment for next year. If inflation runs hotter than the recent average, the COLA could be 10.1%, according to The Senior Citizens League. If inflation cools, the COLA could be 9.3%.

Seniors are still struggling with inflation

Social Security beneficiaries received a record 5.9% cost-of-living adjustment in 2022.

But as inflation has climbed this year, that increase has lost its buying power, according to The Senior Citizens League.

This year’s benefit increase has fallen short based on inflation data through July, according to calculations from The Senior Citizens League. The average benefit of $1,656 is short about $58 per month on average and $373.80 to date this year, the group’s calculations found.

A survey conducted in the first quarter by The Senior Citizens League found half of people ages 55 and up dipped into their emergency savings to cope with rising costs.  Meanwhile, 47% have visited a food pantry or applied for benefits from the Supplemental Nutrition Assistance Program, or SNAP, and 43% have carried debt on a consumer credit card for more than 90 days.

Older and disabled people who rely on low-income assistance may be at risk for having those benefits trimmed once the extra income from a record high COLA kicks in, the group’s research has found.

This is a developing story. Please check back for updates.

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