Cost-of-living adjustments will have a significant increase for 2023
According to estimates by The Senior Citizens League, the cost-of-living adjustments for 2023 will have a 8.7% increase, making it the biggest bump in over 40 years. Read on for more!
The COLA for next year might be the highest it’s been in decades! Read on for more.
This week comes with good news for retirees who are struggling with higher prices due to inflation. The Social Security Administration is finally unveiling the cost-of-living adjustments for 2023. The increase in benefits is scheduled for a Thursday announcement, along with the CPI (consumer price index) of last month.
A nonpartisan senior group called The Senior Citizens League estimated in September that the cost-of-living-adjustments for 2023 could be 8.7%. If that prediction follows through, it would make it the highest increase in decades. Topping even the 2022 5.9% COLA, which was already the biggest one in over 40 years.
Mary Johnson, a policy analyst at The Senior Citizens League admits that those, however, are just estimates. That means that the official cost-of-living adjustments could be higher or lower than predicted. The citizens group has been estimating the new COLA based on every monthly release of CPI data.
At first, The Senior Citizens League estimated the adjustment to a 10.5% increase in benefits based on a CPI index from June. Then, the estimate dropped to 9.6% and eventually to 8.7% due to the following months CPI.
These estimates are usually based on a subgenre of the CPI data, the CPI-W. That is what The Social Security Administration uses to determine the cost-of-living adjustments each year.
The annual cost-of-living adjustments are determined by The Social Security Administration by calculating the percentage of the CPI-W from Q3 of the previous year to the Q3 of the current year. It applies to Social Security and Supplemental Security Income.
Beneficiaries will get a significant cost-of-living adjustments for 2023
Beneficiaries from Social Security and Supplemental Security Income will see more of next year’s cost-of-living adjustments in their benefit checks. The reason behind it is that Medicare Part B premiums prices are going down by $5.20 next year. Currently, they are at $170.10, with deduction directly from the benefit.
That means that beneficiaries will be able to maintain almost all of their cost-of-living adjustments. However, to make sure of it, a few beneficiaries may also have taxes withholdings taken from their checks. Mary Johnson believes that people will really see all of their COLA proceedings before deductions.
The fact that the Federal Reserve has continued to increase interest rates might be reflected in the CPI data from September, along with consumer confidence. On September 21, there was a 0.75 percentage point increase. However, the same rate increase that happened in July is more likely to influence September’s numbers.
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UN asks the Federal Reserve to pause interest rate increases
In a related matter, the UN asked the Fed to pause its interest rate hikes for fear it might trigger a global recession. The Federal Reserve has been increasing rates at a record pace since early 2022 in order to fight inflation in the country. The most recent hike was a 0.75 percentage point in September.
Follow the link below to learn more about it and what it means to you as a consumer.
About the author / Aline Barbosa
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