COLA 2023: Social Security cost-of-living bump could hit 8.7% – USA TODAY

Social Security recipients whose checks haven’t kept pace with inflation this year could make up some ground in 2023.
The roughly 70 million people – retirees, disabled people and others – who rely on Social Security could receive an 8.7% cost-of-living adjustment, or COLA, next year, according to an estimate by Mary Johnson, a policy analyst for the Senior Citizen League, an advocacy group.
That would be the largest increase since 1982.
For the average retiree who got a monthly check of $1,656 this year, the bump would mean an additional $144.10 a month in 2023, boosting the typical payment to $1,800, Johnson estimates.
“A boost by that much is certainly going to ease the (budget) squeeze” for seniors,  she says.
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This year, retirees have struggled to keep up with inflation, with the 5.9% cost-of-living increase approved last October falling short of price increases that have averaged about 9%. The consumer price index rose 8.3% in August from a year earlier, continuing to ease from a 40-year high but staying elevated because of rising food, medical care and rent costs.
The average $1,656 payment left recipients $43.80 a month shy of keeping pace with actual price increases, according to the Senior Citizens League. If inflation eases next year, as expected, Social Security recipients could close some of that gap, Johnson says..
At the same time, 59% of retirees surveyed by Senior Citizens League in late summer believe they’ll face a higher tax liability in 2022 because of the relatively large 5.9% COLA. That includes 21% who worry they’ll have to pay taxes on their Social Security payments for the first time after previously falling below income thresholds.
And over a longer period, Social Security recipients have lost buying power. As of March 2021, they had lost 30% of their buying power since 2000 as COLAs grew by about half as much as the cost of goods and services typically purchased by retirees, according to the league.
By March 2022, that gap in purchasing power had widened to 40%, the largest such annual decline Johnson has recorded.
The Social Security Administration bases its cost-of-living adjustment for the coming year on average annual increases in the consumer price index for urban wage earners and clerical workers, or CPI-W, from July through September. The CPI-W largely reflects the broad CPI that the Labor Department releases each month but differs slightly.
Since the government published the August CPI and CPI-W figures Tuesday, Johnson could make a reasonably accurate estimate of next year’s COLA based on the July and August data.
SSA is expected to announce the actual increase after the government releases the September CPI data on Oct. 13, and the figure could change slightly from Johnson’s estimate.

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