In March 2022, the consumer price index (CPI) increased by 8.5 percent year over year, the highest increase since 1981. Consumers are paying more for everything, from food and furniture to fuel, because inflation is at an all-time high.
And if their income stays the same, their purchasing power decreases. This is particularly true for senior individuals living on a fixed income.
Social security payouts may be changed to account for inflation. Is there a chance that Social Security will be increased in 2023?
Social security payouts are reviewed by policymakers every year
Annually, policymakers examine social security benefits to ensure that consumers’ purchasing power is preserved.
In 2022, social security payouts received a COLA (cost-of-living adjustment) of 5.9%, the highest in nearly 40 years. This was based on inflation data from 2021, and inflation in 2022 has been significantly greater.
The consumer price index for urban wage earners and clerical workers is another measure used by the Social Security Administration (SSA) to calculate COLA (CPI-W). This index has increased by 9.4 percent in the last year, outpacing the CPI.
In 2023, the COLA for Social Security could be even higher
Experts estimate that inflation peaked in March 2022, but that it will not considerably decrease due to the ongoing Russia-Ukraine conflict and supply-chain concerns. As a result, the COLA in 2023 may be larger.
The average social security user has lost $162.60 in purchasing power, according to Mary Johnson of the Senior Citizens League. In addition, the Senior Citizens League predicts an 8.9% increase in the social security COLA in 2023.
What impact will the COLA have on retirees?
Social security benefits are received by around 68 million people, including retirees and disabled people. Approximately half of all seniors live in households where social security benefits account for at least half of their income.
Despite the fact that social security benefits have increased, many people doubt that this will strengthen beneficiaries’ purchasing power in the face of inflation.
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Food, power, housing, and medication, as well as Medicare Part B premiums, are all more expensive. (Standard Medicare Part B premiums will rise 14.5 percent to $170.10 per month in 2022.)
Mary Johnson of the Senior Citizens League proposes that seniors try to cut back on some of their spendings to help them cope with the rising prices. Seniors can save money by using a GoodRx drugstore discount and asking doctors for less expensive options.