Inflation has been rising at a record pace in 2022 as the economy rebounds from the pandemic, this is not uncommon. Although many Social Security beneficiaries whose income is fixed are experiencing the pain of higher prices right now, that high inflation may also translate into another record increase in benefits.
Every year the Social Security Administration gears what it pays in monthly benefits through the annual Cost-Of-Living-Adjustment (COLA). Social Security benefits are one of the few types of incomes retirees receive that is adjusted for inflation.
The US Bureau of Labor Statistics is likely release the Consumer Price Index data for September 2022, the last month of the third quarter, on 13 October. Last year, the Social Security Administration released the 2021 COLA the same day that the CPI data for the third quarter was released, so it could be expected the final 2022 COLA will be known as soon as Thursday 13 October 2022.
The Social Security Administration won't announce the exact #COLA for 2023 until October, but experts predict that benefits could increase by 8-10%. That would be the largest amount since 1981. https://t.co/EED69wsy8i
It is expected that the COLA increase could be as much as 10.5 percent, soundly trumping the increase for 2022 of 5.9 percent.
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"I think somewhere in the 9 percent range is probably a reasonable guess," says Richard Johnson, director of the retirement policy program at the Urban Institute, a Washington, D.C.-based research organization.
"It's hard to predict exactly how, in particular, energy prices are going to evolve over the next few months. I think that's probably the big uncertainty."
The change in COLA, if any, is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) published monthly by the US Bureau of Labor Statistics. The Social Security Administration uses the monthly average from the third quarter of the last year of the COLA, in this case 2021 to the third quarter of the current year. Although Social Security benefit payments go out on the first of every month, 1 January is a holiday so the payment is bumped up to the end of December.