Older Americans, federal retirees, disabled people, and other Social Security recipients are in line for a significant income boost in 2023, according to an estimate released by an advocacy group.
Older Americans, federal retirees, disabled people, and other Social Security recipients are in line for a significant income boost in 2023, according to an estimate released by the nonpartisan advocacy group, The Senior Citizens League.
Social Security benefits are adjusted yearly to reflect changes in the cost of living, but the 2022 increase did not account for the record-breaking inflation that has occurred this year, leaving many of those living on a fixed income in need.
Based on new Consumer Price Increase data for the month of June, The Senior Citizens League estimates that the 2023 increase should be 10.5%. And if inflation keeps rising, that increase could rise as well — up to around 11.4%. However, if inflation dips, the Social Security increase could drop to around 9%.
The final numbers will be released in the fall.
The Cost of Living Adjustment (COLA) has been an annual feature of Social Security since the 1970s, but the 2023 change will be the largest increase since 1981 when Americans were in the midst of another serious recession. An increase of this magnitude is almost unheard of — it was 1.3% in 2020 and 1.6% in 2019, and in 2009, 2010, and 2015 there was no adjustment at all.
The 2023 adjustment prediction comes at a time when Americans are staggering under unprecedented inflation and financial insecurity. Current inflation rates jumped to 9.1% in June, the highest since the 1981 recession and an increase of more than 4% since June 2021.
"Inflation has been so high and so much higher than the 5.9% COLA that people got, they have experienced a shortfall in their benefits," Mary Johnson, a policy analyst for the Senior Citizens League, told CNN. "If people do not have adequate retirement savings or cash savings that they can easily get to, people are putting more on consumer credit cards."
The average monthly Social Security payout is $1,688, so recipients could expect an income boost of around $175 per month.
Although such a large COLA increase is good news in the short term, it could spell trouble for Americans who are expecting Social Security benefits in the future. Based on data from February, the non-partisan Committee for a Responsible Federal Budget estimates that Social Security will become insolvent by 2035. When this happens, recipients’ benefits will decrease by 20%. Using current data, the Committee for a Responsible Federal Budget estimates that insolvency will occur in 2034 instead.