COLA Increase Predictions Jump to Double Digits – If inflation remains on pace for the rest of the year, the 2023 cost-of-living adjustment (COLA) for Social Security recipients could reach double digits – a historic increase, and the biggest for 41 years.
Reports suggest this month that, based on present inflation trends and the latest consumer price index data, the next Social Security payment increase could exceed 10%.
That’s significant for many reasons, not least because COLA has traditionally grown by an average of 1.88% annually over the last decade. This year’s COLA increase was already 5.9%, significantly higher than normal.
According to the Committee for a Responsible Federal Budget (CRFB), a non-partisan outfit that analyzes and reports on fiscal issues, Social Security recipients could be on track for a 10.8% increase starting in January of next year, assuming that inflation continues at the current pace. However, that figure could still go higher if inflation worsens in the coming months.
However, if inflation is brought to heel – potentially as a result of the Federal Reserve’s ongoing efforts to drive down demand through interest rate hikes – then the COLA increase for next year may be less. But not by much. According to the CRFB, decelerating inflation through the rest of the year might mean a COLA increase of 7.3%.
“The actual COLA will likely be somewhere in between, and could be the third- or fourth-highest in history,” the non-partisan group said last month.
COLA may hit double digits this year, and it may not. All we can say with certainty is that the most recent estimates are higher than they were earlier in the year – and this year’s increase will be historic.
Higher Than Last Month’s Estimates
Only last month, financial analysts expected that the next cost-of-living adjustment might be 8% at the end of 2022.
CBS News reported in early June how a Social Security Administration official had suggested that the next COLA could be “closer to 8%” at the end of this year, citing the rate of inflation at the time.
Stephen Goss, chief actuary at the Social Security Administration, revealed the agency’s predictions in a webinar hosted on June 2 with the Bipartisan Policy center on Social Security.
“Looking at the CPI-W trends we’re seeing so far this year, it’s likely we’ll have a COLA closer to 8% than to 3.8%,” he said.
Roughly a week after that webinar, however, the consumer price index report for May was released, showing how inflation rose to the highest levels since 1981. The report showed fuel up 106.7% over last year, the consumer price index rising 8.6% for May, and real wages declining 0.6% from April and 3% on an annual basis.
The news prompted reports of a much higher COLA coming in December.
But Is Even a 10 Percent COLA Increase Enough?
One avid reader of 19FortyFive who agreed to speak to us on background who lives in Billings, Montana, and depends on Social Security for her total income sounded off in an interview, explaining that even a 10% increase is not enough. “How can I be thrilled about a 10 or even 15 percent jump in my check if food prices on some of the things I need are going up much more? I am still seeing my purchasing power decline.”
And that might be the sentiment of millions of other Americans who are surely in the same tough financial position for sure.
Jack Buckby is a British author, counter-extremism researcher, and journalist based in New York. Reporting on the U.K., Europe, and the U.S., he works to analyze and understand left-wing and right-wing radicalization, and reports on Western governments’ approaches to the pressing issues of today. His books and research papers explore these themes and propose pragmatic solutions to our increasingly polarized society.