Although the United States Congress and the Social Security Administration do not announce the official COLA figure until October, there is much speculation. All of these figures could be true, although nothing is certain for a couple of months. This means that there are many organizations placing their bets on the COLA, but nothing is official yet. Social Security will see an increase by 2023, yes, but that increase has yet to be decided.
I’m sure you’re worried about whether your purchasing power will remain at its peak collecting only Social Security. The COLA is intended to do just that, although for many retirees it may seem insufficient. It should also be noted that in some states it is better to live on just your retirement benefit. So, regardless of your monthly check, the increase may be of interest to you.
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How much will the Social Security COLA increase?
As we have previously discussed, there is no definitive and exact figure. That figure will be announced in October by the Social Security Administration. In the meantime, there are agencies that know perfectly well how these increases work, so they can provide reliable data. With current inflation and the increase in prices, it is estimated that the COLA will rise to double digits.
In this regard, one of the most reliable sources is The Senior Citizens League. This organization has stated that by 2023 the COLA increase could be 10.5%. This would be a historic increase, although it would fall short of the record Social Security hikes. All of these calculations are made on the basis of current price increases. If true, a retiree currently earning $1,000 could earn $1,100 as of January of next year.
How is the COLA calculated?
The formula for calculating the COLA has been the same since 1975. The basis was established in 1975. To know how much the COLA will increase, or at least to have an approximation, we must know what the increase in the CPI-W is. The average for the months of July, August and September are used to know how much extra money retirees will need for the coming year.
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After making these calculations, the Social Security Administration announces the COLA increase figure in October. Despite this, it is not October when retirees see the increase in their monthly check, but starting in January of next year. Therefore, we will have to wait a few more months to earn a little more money on a monthly basis.