Retirees could see a substantial cost-of-living adjustment in their Social Security benefits next year.
The exact amount of the increase will be determined next month after the inflation rates for August and September are published, but if inflation remains high, average recipients could see an increase of $158.98, according to a preliminary estimate from the Senior Citizens League, CNBC reported. The inflation rate surged to 8.5% in July.
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The adjustments are calculated from the inflation rate of the year’s third quarter, from July through September, and are compared to the same period the previous year.
While many economists focus on the more generalized consumer price index to measure inflation more broadly, the cost of living is derived from the more narrow consumer price index for urban wage earners and clerical workers, or CPI-W, which specifically measures costs for hourly urban wage earners and clerical workers. Inflation for the CPI-W increased 9.1% over the span of 12 months ending in July. The broader index encompasses 87% of the U.S. population, while the CPI-W consists of 32%, according to the Bureau of Labor Statistics.
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The cost-of-living adjustment ticked up by 5.9% in 2022, marking one of the largest increases for Social Security payments in decades. However, with inflation, seniors earning $1,656 per month need an additional $58 per month to keep up with rising prices, according to an analysis from the Senior Citizens League.
The Social Security Administration is expected to announce the cost-of-living adjustment on Oct. 13, following the release of September’s inflation numbers, according to CBS News.
