Social Security has shown the latest figures for the Cost-of-Living Adjustment that takes place every year. The US government, just like many other countries from all over the world, has tried to control inflation without much success. In June, the Consumer Price Index rose to 9.1% if we compare it to the year 2022. The COLA for 2023 could raise to approximately 10.5%. It is odd that we reach double-digit inflation though.
According to Worlddata the inflation for the five last years was 4.70% in 2021, 1.23% in 2020, 1.81% in 2019, 2.44% in 2018, and 2.13 in 2017. Therefore, it is very rare that this figure goes above 9 percent and it has not been like that for four decades. If it keeps soaring, inflation could even get up to 11.44%. Social Security announced the increased payments will benefit more than 7 million SSI beneficiaries.
Hopefully, if they manage to bring inflation down, it could be of about 9.8%. The Federal Reserve has already carried out several measures to have inflation under control. Last November 2, Fed approved a 0.75 hike. It raised the short-term interest borrowing rate. Apparently, they hope it is the last increase. It is true, however, that there was another increase in June by 0.75 too. So, it is still too early to know what their next move will be. It is very difficult to predict since we live in a global world. Besides, we are affected by the pressure other economies suffer too.
Many US Supplemental Security Income beneficiaries do not agree with the way the SS COLA works.
How is the COLA based then? It takes into account the Consumer Price Index for Urban Wage Earners and Clerical Workers. First, they have a look at the increase it has got. To do that, they check the third quarter of the last year. Then they focus on the third quarter of the current year. Sometimes, there is not any increase. In this case, the Cost-of-Living Adjustment cannot be done.
Those who disagree and are not happy at all with the way they determine COLA, reject Medicare Premium increases. Luckily, Social Security benefits have gone up this year. Not only have they increased, but Medicare Premium has gone down too. These are very important measures to help people get a decent life during their retirement.
It is true that beneficiaries of SSI could get higher incomes, but more often than not, COLA affects those who have lower incomes when they pay taxes. They might be over the limit and they may end up paying more. Regardless of the skyrocketing prices of goods and services. Take for example basic things like electricity and food. Many SSI beneficiaries feel that keeping Medicare Part B Premium prices down would be essential.