The Social Security Administration announced last fall that recipients of the program would receive a 5.9 percent cost-of-living (COLA) increase in their benefits, the largest such increase since the early 1980s. The size of the increase is pegged to inflation, which rose sharply last year.

What can recipients expect next year? We won’t know for a while, but with inflation continuing to rise, the number will likely be high for 2023.

A recent Go Banking Rates story called it a myth that there is a Social Security COLA increase every year. The COLA number is indexed to the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, which is based on one year’s third quarter to the next. Most years, the increase is in the low single digits, although it went up by a lot in 2022 and will likely do so again next year.

The increase for this year wasn't announced until November of 2021, so it will be a while before recipients know for sure how high the adjustments are.

The Senior Citizens League tracks the COLA number closely and recently projected that based on current trends, the COLA increase could be 7.6 percent in 2023, in what it called a preliminary estimate. The organization has also stated that the increase this year, while very high, hasn’t been enough to meet the rising costs of living for many recipients, especially as gas prices and other expenses have continued to rise.

The projection was issued after the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.8 percent in February, or 7.9 percent annualized. 

Also this week, the Senior Citizens League commented on the Federal Reserve’s recent announcement that it is raising interest rates in order to combat continuing inflation.

“Credit card debt in retirement can quickly get out of hand, and this is especially true during periods when interest rates climb,” Mary Johnson, Social Security, and Medicare policy analyst for The Senior Citizens League, said in the announcement on March 29. “We are in a steeply inflationary period when rising interest rates will mean many consumers will need to reduce the amount of debt that they are carrying on credit cards month to month in order to keep that cost manageable.”

The Senior Citizens League also cited a recent survey of membership about spending and saving habits. “Inflation has many older households struggling to stay afloat,” Johnson says. “As difficult as these times may seem right now, it’s important to have a plan to reduce debt — and that would mean putting less on credit cards, and paying more of the balance,” she said. “The Senior Citizens League believes that passage of legislation to provide a $1,400 stimulus payment could make an enormous difference for many of these households.”

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.

Image: Reuters.