Millions of Social Security recipients got a 5.9% cost-of-living adjustment (COLA) increase in 2022 — the biggest in decades. If inflation continues at its current rate, next year’s COLA could be much higher.
According to a new prediction from the non-profit Committee for a Responsible Federal Budget (CRFB), the COLA for 2023 could be as high as 10.8%, which would be the highest increase in four decades. The average monthly Social Security monthly benefit is $1,540, but a 10.8% COLA increase would raise that benefit amount to $1,694.
However, this prediction assumes that the COLA for 2023 is 10.8% if inflation remains unchecked.
The Motley Fool noted that there are signs that inflation could be moderating. A cooling housing market combined with falling commodity prices and lower consumer spending could indicate that inflation may not be rising at such a quick rate later this year. The Federal Reserve also raised its benchmark interest rate by 75 basis points in June, the biggest rate hike in nearly 28 years, The Fool added.
The 10.8% COLA prediction is also on the upper end of the estimated range. The CRFB made several predictions based on what inflation could do in the coming months. If inflation rates were to slow down or stop, the COLA could be as low as 7.3%, Money reported.
An official at the Social Security Administration estimated in June that the 2023 COLA would likely be around 8%, Money added, while the Senior Citizens League’s latest COLA estimate is 8.6%.
The official Social Security COLA for 2023 will be announced in October based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
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