The 2023 COLA for Social Security could be of historically large proportions given that the Bureau of Labor Statistics is monitoring a spike in the Consumer Price Index. The Social Security Administration (SSA) will reveal the 2023 COLA next month, which will be incorporated into benefits beginning in January.
The Consumer Price Index for All Urban Consumers (CPI-U) climbed marginally by 0.1 percent in August after remaining unchanged in July, according to data released by the Bureau of Labor Statistics on Tuesday. The average price in August increased 6.3 percent over the same month last year as a result of the price change over the previous two months as a whole.
How is COLA Determined?
Contrary to the more widely used CPI-U, which experienced a modest increase in total prices, the SSA utilizes the Consumer Price Index for Urban Wage Earners & Clerical Workers (CPI-W).
The SSA believes that this metric is more helpful in determining how financially secure seniors are across the nation. Some Capitol Hill officials have recently suggested developing a CPI specifically for seniors that would more effectively track and represent pricing functions and the effects on the buying ability of the nation’s oldest citizens.
What was the COLA for 2022 ?
The SSA computed a COLA of 5.9 percent for the previous year, and this year’s COLA will likely be greater. The CPI-W has soared from 271.552 to 290.973 since last October.
Based on these gains, a COLA of 8.1 percent would be provided if the mean of July – August were used to determine the COLA. After compiling the price data for September, the SSA will announce its final judgment for the 2023 COLA next month.
Older People’s Purchasing Power Reduced Historically
The problem with utilizing a three-month snapshot to calculate the COLA is, that it might not accurately reflect the strain on household finances that has existed during this inflation crisis.
The notion that the COLA might be lower than what might be provided based on statistics from last month serves as an illustration of this. Seniors have found it difficult to cope with the rapid price rises, as many of them depend entirely on their Social Security benefits.
Many Social Security recipients are skipping meals and limiting their medication, according to the Senior Citizens League (SCL), because they cannot afford to buy groceries or prescription medications.
Food prices have increased by more than 11% since last year, and medical services have increased by 6.1%, both of which are higher than the 5.9% COLA promised for 2022.
According to long-term research published in May by the Senior Citizens League, “high inflation has led Social Security payouts to lose 40% of their purchasing value since the year 2000.”
According to Mary Johnson, a Social Security policy researcher for The Senior Citizens League who carried out the analysis, “that’s the worst loss in purchasing power since The Senior Citizens League started this study in 2010” reports AS.
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