The United States Government reported inflation data. These data were not good because they were higher than expected. For people collecting Social Security, this data is worse because they depend on a fixed income. If this inflation does not abate and continues, next year the largest Social Security COLA adjustment in 40 years will occur.
However, it is also important to know that this Social Security COLA is not enough for everyone. For that reason, many people believe that it is necessary to change the system used to calculate the increase in retirement pensions. As of May, inflation increased by 8.6% in the last few months. That is why it is important to change the way they calculate COLA increases.
The CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers) increased in recent months to 9.3%. This indicates that the cats for all people are higher. Therefore, Social Security benefits should also be higher in the future.
What is the COLA forecast for Social Security?
The Social Security COLA increase by 2023 could be 8.6%. The Senior Citizens League has made this prediction based on inflation data so far this year. Last month the same group made the same prediction, also based on the data provided. If inflation doesn’t go down, the COLA will have to increase.
On the other hand, Stephen Goss, the chief actuary of the Social Security Administration, predicts that the COLA could be close to 8% next year, but he does not assure that it will go as high as 8.6%. This figure is not certain, as it is only a guess. Therefore, this information is not yet 100% official and we will have to wait to know the exact figure of the COLA increase.
The exact amount of the COLA increase will be announced by the Social Security Administration in October of this year. After that, benefits will increase their amount of money in payments starting in January of next year. The COLA increase is made on the basis of a study conducted on prices and the CPI-W increase in July, August and September.
What is the COLA increase?
The COLA increase will depend on inflation during the remaining months of the year. Normally, data is collected every year for the months of June, July and August to average the price increase. With this, the Social Security Administration decides what is the best percentage to increase the COLA. But it is still too early to have a definitive figure.
Knowing this, we can only wait, although the forecasts warn that it is very likely that we are facing a record increase in the Social Security COLA. However, it may not be enough for many people collecting retirement benefits, so The Senior Citizens League is proposing some changes and more increases. These changes, for the moment, are only proposals. Those proposals we do not know if they will end up happening in the future or not. For the time being, we know for sure that next year Social Security benefits will increase, but we do not know the exact amount.