Personal finance

High inflation continues to point to bigger Social Security cost-of-living adjustment in 2023

Joe Raedle | Getty Images News | Getty Images

Social Security beneficiaries could see another record cost-of-living adjustment in 2023, based on the latest government data showing persistent high inflation.

But that increase may not be enough to pare the loss in buying power recipients have experienced over the years, according to a new analysis from The Senior Citizens League, a non-partisan advocacy group.

A popular inflation measure, the Consumer Price Index for All Urban Consumers, known as the CPI-U, was up 8.3% over the past 12 months, staying near 40-year highs, according to April data released on Wednesday.

More from Personal Finance:
More Americans living paycheck to paycheck as inflation climbs
Where consumers plan to cut spending amid record-high prices
Americans say inflation has ‘negative impact’ on goals

Meanwhile, the index the Social Security Administration uses to calculate cost-of-living adjustments each year, the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, increased by 8.9% over the last 12 months.

That points to a cost-of-living adjustment of 8.6% for 2023, based on the April data, according to The Senior Citizens League.

That is down from the group’s 8.9% COLA estimate based on March CPI data. At that time, the CPI-W had increased 9.4% over the past year.

Social Security beneficiaries saw a 5.9% bump to their monthly checks in 2022, the highest increase in about 40 years.

To be sure, a bigger cost-of-living adjustment for 2023 is not guaranteed.

To calculate the COLA each year, the Social Security Administration compares CPI-W data from the third quarter to the third quarter of the prior year.

If inflation subsides, there is the possibility of a lower adjustment, or even no increase, for next year.

However, even another record high cost-of-living adjustment may not be enough to stop the loss of buying power people who rely on those benefits have seen over the years.

Social Security benefits have lost 40% of their buying power since the year 2000, according to a new analysis by The Senior Citizens League.

The sharpest drop in purchasing power ever recorded by the group occurred between March of last year and this March, when it dropped 10 percentage points.

This is a developing story. Please check back for updates.

Products You May Like

Articles You May Like

Walmart shares fall as higher costs, supply chain problems and inventories eat into profits
Battle over smoking in New Jersey casinos pits workers’ health against profits
Investor interest in equity and crypto-focused funds picking up despite the sell-off, Tifin CEO says
Why Tim Cook says college grads should prioritize making a difference: ‘Leading a company and a good life are not the same thing’
Paramount shares jump about 10% after Buffett’s Berkshire reveals new stake

Leave a Reply

Your email address will not be published.