Many people are struggling under the weight of high inflation hitting the US economy. For workers, a tight labor market offers some opportunity to negotiate wage increases to avoid being swamped. But for those who depend on money from the state, such as Social Security recipients remains a nervous weight as inflation continues to riseand exceed their benefits, which remain the same throughout the year.
Therefore the Cost of living allowance (COLA) is so important. Around the beginning of winter, the Social Security Administration announces the rate at which its payments will increase for the next year, usually in line with inflation. The higher the inflation, the more the benefits increase.
That was announced last year the COLA increase would be 5.9 percent. This happened at a time when annual inflation was at 6.2 percent, slightly lagging behind. Now, with inflation at 8.3 percent, that increase was woefully short of what was needed.
“Even that [5.9% increase] isn’t keeping up with the rate of inflation today — and that’s really difficult when you’re trying to live on a steady income,” Mary Johnson, Social Security and Medicare Policy Analyst for the Senior Citizens League, told CBS MoneyWatch. “We are in some extreme circumstances.”
The Senior Citizens League (SCL) regularly forecasts its expectations for the COLA adjustment; They are, after all, an advocacy group to support seniors. For 2023the group is forecasting this the increase could be up to 8.6 percent. This would break the previous record from 1981 of 7.4 percent.
What does this increase mean in real terms?
Figures from the SSA state that the current The average monthly benefit for a retiree is $1,619.67meaning beneficiaries could see an increase of $139.29 per month in early 2023, bringing the average check to around $1,758.
Last year, the SCL slightly overestimated the COLA increase by two percentage points. With inflation in flux and its rise slowing in April, there are still many months before the SSA decides to hike.