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Social Security’s cost of living adjustment could be 9.6% in 2023


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

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

By the team’s calculations, that would add up to $158.98 per month for an average retiree benefit of $1,656.

Meanwhile, The Senior Citizens League has prediction is 10.5% Last month’s COLA based on CPI data was hotter than expected.

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The Consumer Price Index, which measures changes in the prices of goods and services, up 8.5% in July more than a year ago, the pace was slower than in previous months due to falling gas prices.

A subset of that index, the Consumer Price Index for Urban Sage Workers and Clerks, or CPI-W, is used to calculate the annual cost of living adjustment of Department of Social Security, up 9.1% in July in the previous 12 months.

COLA estimates are still preliminary

The Senior Citizens League estimate is still preliminary. The Social Security Administration calculates the annual COLA by determining the percentage change in CPI-W from the third quarter of the current year to the average for 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.

According to Mary Johnson, Medicare and Social Security policy analyst at The Senior Citizens League, gas prices are one of the big drivers of CPI-W. Gasoline price fluctuations over the next two months could affect the final Social Security COLA calculation.

Social Security beneficiaries can still expect a record COLA for next year. If inflation rises above the recent average, the COLA could be 10.1 percent, according to The Senior Citizens League. If inflation cools down, the adjustment may be 9.3%.

Seniors are still struggling with inflation

The social security subjects have received the application 5.9% COLA in 2022.

But as inflation picked up this year, that increase dented its purchasing power, according to The Senior Citizens League.

This year’s welfare gains have been short-lived based on inflation data through July, according to calculations from The Senior Citizens League. The team’s calculations show an average benefit of $1,656 short of about $58 per month and $373.80 so far this year.

One survey conducted in the first quarter of The Senior Citizens League found that half of people 55 and older have their hands on their emergency savings to cope with rising costs. Meanwhile, 47 percent have gone to the grocery store or applied for Supplemental Nutrition Assistance Program benefits, or SNAP, and 43 percent have been in consumer credit card debt for more than 90 days.

The team’s research has shown that elderly and disabled people living on low-income assistance could be at risk of having those benefits cut off when extra income from COLA is record high.

Medicare Part B premiums may stay the same next year

The impact of the record-high cost-of-living adjustment for 2022 was also limited by higher-than-normal Medicare Part B premiums.

Premiums, which have increased 14.5% this year, are typically deducted directly from Social Security expenses.

The standard monthly premium is $170.10 per month in 2022, up from $148.50 in 2021.

Any help with costs will make a big difference going forward, especially protections like limits on out-of-pocket spending.

Mary Johnson

Social Security and Medicare Policy Analyst at The Senior Citizens League

Much of this year’s increase is due to the cost of an Alzheimer’s drug, Aduhelm, which has been cut in half.

The savings are expected to be applied to the 2023 Part B premium. However, Medicare trustees expected in their June annual report that the monthly premiums are consumed. The benchmark for 2023 will stay the same, at $170.10 per month.

Legislation can help limit prescription costs

According to Johnson, one thing the annual COLA measure doesn’t take into account is the percentage of people paying for prescription drugs in retirement.

The Inflation Reduction Act, just passed by the Senate, seeks to limit those costs by annual out-of-pocket spending limit $2,000 per year for Medicare Part D prescription drugs.

“Any help with costs will make a big difference going forward, especially protections like limits on out-of-pocket spending,” Johnson said.

That law has yet to be passed by the House of Representatives and the president. The $2,000 limit is expected to be in effect through 2025.

Current projections from the Centers for Medicare and Medicaid Services suggest that the average monthly base premium could be $31.50 in 2023down from $32.08 in 2022.

However, the maximum deductible for Part D coverage is expected to increase to $505 in 2023 from $480 this year.

Follow recent research from the Center for Retirement Studies at Boston College.

Correction: A headline on this article has been updated to reflect that monthly Social Security benefits could increase by $159 by 2023. An earlier title gave an incorrect year.



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