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Social Security beneficiaries will be in line to receive a record high cost-of-living adjustment in 2023 due to inflation. The question is exactly how high it may be.
Based on new Consumer Price Index data for June released on Wednesday, The Senior Citizens League, a nonpartisan senior group, now estimates the cost-of-living adjustment will be 10.5% for 2023.
A 10.5% COLA would amount to a $175.10 increase to the average monthly retirement benefit of $1,668, according to The Senior Citizens League.
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In comparison, the group’s estimates from the past two months indicated the COLA for next year might be 8.6%.
That’s as the Consumer Price Index for all Urban Consumers, or CPI-U, climbed 9.1% in June over the previous 12 months, the fastest pace since 1981.
Meanwhile, the measurement used by the Social Security Administration to calculate the COLA each year — the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W — shot up 9.8% over the last 12 months.
To be sure, the estimate for next year’s COLA is still tentative. The Social Security Administration calculates the annual adjustment by taking an average of the third-quarter data from the current year and comparing it to the third quarter from the previous year.
The actual increase for next year may vary depending on how high inflation is in the coming months.
“Looking ahead, there are a number of reasons why we expect those high prices to ease over the coming months,” White House Press Secretary Karine Jean-Pierre said in a press briefing this week.
If inflation cools in the coming months and is lower than the recent average, the COLA could be 9.8%, according to The Senior Citizens League. If instead it runs hot or higher than the recent average, the increase to benefits could be 11.4%.
In 2022, Social Security beneficiaries received a record 5.9% boost to benefits, the highest increase in about 40 years. However, since then inflation has kicked up.
This is a developing story. Please check back for updates.