9.6% COLA Increase? Social Security to See Biggest Boost Since 1981
A 9.6 percent increase would be the highest COLA increase since 1981.
The government on Wednesday released its mostly consumer price index report, and it contained better-than-expected news about inflation. Prices have risen 8.5 percent from the same month year ago, but “Core CPI” rose 5.9 percent annually and 0.3 percent monthly, both lower than analyst expectations, per CNBC.
“Things are moving in the right direction,” Aneta Markowska, chief economist at Jefferies, told CNBC. “This is the most encouraging report we’ve had in quite some time…”
“At the very least, this report takes the pressure off the Fed at the next meeting,” Markowska added. “They’ve been saying they’re ready to deliver a 75 basis point hike if they have to. I don’t think they have to anymore.”
Gas prices, which have declined for the last seven weeks, are the main factor driving the slowing of inflation.
But what of Social Security?
The Senior Citizens League, also per CNBC, has projected a 9.6 percent increase next year in Social Security benefits, which are pegged to the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. The League had estimated a 10.5 percent increase the previous month.
The League is clear that its predictions are only estimates.
Per 401K Specialist magazine, even a 9.6 percent increase would be the highest COLA increase since 1981.
“Based on new CPI-W data through July, it appears the COLA for 2023 will be 9.6%,” Mary Johnson, TSCL’s Social Security and Medicare policy analyst, told that magazine. “If inflation runs ‘hot’ or higher than the recent average, the COLA could be 10.1%. If inflation runs ‘cold’ or lower than the recent average, the COLA could be 9.3%.”
Johnson also predicted that the 2023 COLA number will be announced on October 13.
“There are only two months of consumer price data left to go,” Johnson told 401K Specialist.
“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% COLA,” she added. “Based on inflation through July, we calculate that a $1,656 benefit is short about $58 per month on average and by a total of $373.80 year to date.”
Meanwhile, there are several efforts in Congress to reform Social Security, from a Bernie Sanders-backed proposal to dramatically increase the size of the program and protect its solvency well into the future, to an effort to get rid of the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). However, it’s not clear how much momentum any of the plans have in the current Congress, or whether they have a chance to pass.
Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.