Social Security checks may jump 8.6%, the largest increase since 1981, experts say
Seniors and others who rely on Social Security benefits could see the biggest cost-of-living adjustment since 1981 next year, with an advocacy group for Older Americans forecasting an 8.6% increase.
The typical monthly salary for Social Security is about $1,658, which means recipients could see an increase of $142.60 a month in early 2023, bringing the average check to about $1,800, according to new projections from the Association of Senior Citizens.
That forecast is based on the latest U.S. inflation numbers, including Wednesday’s release by the government of consumer price index data for April, said Mary Johnson, the group’s Social Security and Medicare policy analyst. The consumer price index, which is a broad basket of goods and services, rosedown slightly from an 8.5% annual increase in March.
The Social Security cost-of-living adjustment, or COLA, is based on a slightly different basket of goods and services that is also tracked by government – the Consumer Price Index for urban wage earners and clerical workers (CPI-W). This basket shows inflation running a bit higher than the broader price index, with the consumer price index jumping 8.9% in April compared to a year ago, according to government data.
An 8.6% jump in monthly Social Security checks could provide some relief for the millions of seniors struggling to keep up with the rising costs of everything from gas to groceries. 69 million Americans who collect Social Security have receivedBiggest bump since 1982. But inflation jumped well above that number in 2022, eroding the purchasing power of many seniors.
“until that [5.9% increase] It’s not keeping pace with today’s inflation – which is really hard when you’re trying to live on a steady income.
The Social Security Administration will determine the 2023 COLA in October based on inflation data for the previous three months, meaning the actual rate hike could be somewhat different from the Association of Senior Citizens’ expectations. Johnson last yearWhile the actual boost was 5.9%.
More food stores and food stamps
COLA increases in 1980 and 1981 — 14.3% and 11.2%, respectively — reflected the two largest increases since 1975, according to the Social Security Administration. Before that, the increase in the cost of living was determined by legislation, not based on the inflation index.
Johnson noted that the purchasing power of Social Security payments has eroded 40% since 2000, in part because the increases are not keeping pace with inflation. Her group wants the Social Security Administration to base annual COLA increases on an index better designed for older adults, the Consumer Price Index for Older People, which gives more weight to costs like health care — often a big expense for older Americans.
More seniors are relying on food banks and food stamps as their purchasing power erodes, with the group’s surveys finding that 45% of respondents in January reported relying on these resources for food security – double the rate in October.
“It’s very sad,” Johnson said. “This is the point where I want to cry.”