Social Security recipients struggling with high inflation are expected to get a big boost in their monthly benefits starting next year.
Thanks to the higher inflation rate for July, beneficiaries could get as much as an extra $159 a month in 2023, according to a new estimate from the Senior Citizens League, a nonprofit advocacy group.
The Social Security Administration’s annual cost of living adjustment (COLA) formula is based on inflation readings for July, August, and September. Even if inflation peaks in July, readings for the next two months are still likely to be significantly higher than in previous years, given that consumer prices are expected to hit 40-year highs for most of 2022. Stay on.
Mary Johnson, policy analyst and editor of the Senior Citizens League, said she is currently proposing an annual adjustment of 9.6 percent, which would be the largest increase in Social Security benefits since 1981.
“It’s really unusual,” she said. “Effectively, no one currently receiving Social Security will get that much COLA.”
The 9.6% adjustment will compare to an increase of 5.9% last year, which equates to an average monthly income of $92.30.
The final net benefit to Social Security recipients will also depend on how much Medicare Part B premiums increase.
But Johnson said Medicare administrators indicated earlier this year that premium increases next year may be low, or even nonexistent.
That’s because this year’s dramatic, 14.5% increase turned out to be unnecessarily large, as it was largely tied to the price of an Alzheimer’s drug that has since halved.
“The Centers for Medicare and Medicaid Services (CMS) agreed that beneficiaries are being charged more for their Part B premiums in 2022, [however] Beneficiaries will not receive refunds this year,” Johnson wrote in a follow-up email. “CMS says it will use additional premium charges to offset the 2023 Part B premium increase. will do.”
A CMS spokesman declined to comment. An official announcement about Medicare Part B premium costs is expected this fall.
People on fixed incomes have been among those hardest hit by the 40-year high inflation rate, which means benefit payments haven’t kept pace with rising prices this year, Johnson said. As an example, the Senior Citizens League estimates that the $1,656 monthly Social Security benefit is about $58 less than the average monthly benefit, based on the inflation rate as of July.
And for most beneficiaries, the coming increase will still fall short of what recipients need to offset rising food and other consumer prices, Johnson said. Already, 37 percent of those surveyed by the Senior Citizens League said they received low-income assistance in 2021. That’s more than double the 16 percent who were receiving needs-based assistance before the pandemic.
“Social Security was never intended to be the only source of income for people,” Johnson said.
The Social Security Administration will announce the 2023 cost-of-living adjustments in October after consumer price index data for September is released.