Social Security beneficiaries may get another large cost-of-living adjustment in 2023, but they’ll still need to be wary of inflation and how it impacts their spending.
Based on April’s consumer-price index data released on Wednesday, the latest COLA estimate for 2023 is 8.6%, said Mary Johnson, a Social Security policy analyst at the Senior Citizens League. Johnson tracks Social Security COLAs every year. If it’s true – the Social Security Administration releases COLA information for the following year in the fall – it would be the highest adjustment since 1981. For the last decade leading up to 2022, Social Security COLAs had averaged somewhere under 2%.
But a high cost-of-living adjustment is only half the picture for Social Security recipients. Although this would mean an uptick in their monthly benefits, it’s a result of rising costs, so a higher COLA reflects the effects of inflation on their everyday spending.
Social Security COLAs have risen 64% since 2000, but the average senior expenses up until March 2022 have grown 130%, according to a Senior Citizens League report released on Wednesday. Since 2000, Social Security benefits have lost 40% of their purchasing power, which saw the largest drop in Johnson’s research to date between last year and this year.
The average monthly benefit in 2000 was $816, compared with $1,336.90 in 2022, after cost-of-living adjustments. To keep up with the rising costs of goods, however, beneficiaries would need more than $500 extra per month – or $1,876.60 – to keep up with the purchasing power retirees had in 2000, the report found.
Retirees suffered from price increases mostly in food prices, home heating and gasoline, as well as from the 14.5% jump in Medicare Part B premiums this year.