Inflation could give Social Security recipients a record $1,700 increase next year

Social Security recipients are on track to achieve the largest-ever adjustment-of-living adjustment (COLA) in four decades as stubbornly high inflation rapidly erodes the purchasing power of retired Americans.

The Senior Citizens League, a nonpartisan group focusing on issues related to older Americans, estimates the adjustment could be 8.7%. august inflation dataThis shows that consumer prices increased by 8.5% over the previous year, close to a multi-decade high.

The annual Social Security change, calculated based on the Consumer Price Index, or CPI-W, for urban wage earners and clerical workers jumped 8.7% over the previous year.

Should Social Security beneficiaries see an 8.7% increase in their monthly checks next year, it would mark the sharpest annual adjustment since 1981, when recipients saw an 11.2% bump. COLA’s prediction for 2023 from the Senior Citizens League is slightly lower than its previous 9.6% estimate.

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social Security

In this photo illustration, a Social Security card sits with a check from the US Treasury October 14, 2021 in Washington, DC (Kevin Dietsch / Getty Images / Getty Images)

An increase of that magnitude would increase the average retirement benefit by $1,656 per month to about $144 per month, or about $1,729 annually, the group said.

“A COLA of 8.7% is extremely rare and will be received by most Social Security beneficiaries alive to date,” said Mary Johnson, a policy analyst with the Senior Citizens League. “Only three times this was higher since the introduction of automatic adjustment.”

social Security Administration Will release the final adjustment percentage in October.

US inflation

A buyer looks at organic products at a supermarket on August 23, 2022 in Montebello, Calif. (Federick J. Brown / AFP via Getty Images / Getty Images)

The projected figure is unlikely to change much as there will be just one more month of inflation data before the final adjustments are released.

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According to Johnson, decades of high profit growth aren’t always good news for recipients. Higher Social Security payouts are a bit of a catch-22. They can reduce eligibility for low-income safety net programs such as food stamps and enlist people in high tax bracket, More significant payments, inevitably, do not result in more money in people’s pockets.

“High inflation COLAs can have some very long-term effects,” Johnson previously told Fox Business. “It’s kind of a no-win situation.”

social security check

A couple looks at a Social Security check. (iStock / iStock)

The Social Security Administration announced last year that the average benefit would increase by 5.9% in 2022, which equates to an average monthly increase of $92 for retired Americans. rising inflation The entirety of the increase has already been exhausted, with recipients losing 48% of their purchasing power by August, according to calculations by the Senior Citizens League.

The average monthly benefit for retirees would have to increase by $417.60 in 2000 to maintain the same level of purchasing power.

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The group has pushed the Congress To adopt legislation that would index inflation adjustments specifically for senior citizens, such as the Consumer Price Index for the Elderly, or CPI-E. This index clearly tracks the household expenditure of people aged 62 and above.

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