Social security beneficiaries are among the most affected due to high inflation. The record inflation that has remained relentless in its growth throughout 2022 has led to an increase in price across products and services. It has affected everything from gasoline to groceries. And in a year with a single new stimulus check, seniors and the disabled have come to depend on an increase in the Cost of Living Adjustment (COLA) to survive.
Recipients of the Social Security stimulus checks struggling with record inflation are in for a major boost in their monthly benefits from 2023. The agency has announced a substantial increase of 8.7% in the COLA.
The adjustment will represent the biggest increase in over 40 years. The last time such a major increase was announced was in 1981. So for surviving beneficiaries, it will be the largest ever that they enjoyed. The 2022 increase in COLA was much less in comparison to 5.9%.
Retired workers and people with disabilities, including the visually impaired, are eligible for monthly payments from the Social Security Administration (SSA). The Supplemental Security Income (SSI) is increased in sync with the inflation rate through the COLA.
The COLA was announced in the second week of October when the Bureau of Labor Statistics released the September Consumer Price Index data. Retired workers and the disabled received a letter in December 2022, giving a detailed account of how much the COLA will impact their own benefit amount for next year.
The way in which the COLA is calculated is detailed under federal law and uses a specific formula with data gleaned from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). the SSA every year uses the average of this consumer price index from the third quarter of each year (July, August, and September), and compares those values to the corresponding months of the previous year.
For instance, this year’s COLA was calculated by averaging the figures of the consumer price index from the third quarter of 2021 and then comparing them with the 2020 averaged figures.
The average inflation reading among urban wage earners and clerical workmen in these three months (July, August, and September), came in at approximately 8.5%, 8.3%, and 8.2%. These figures show a slight easing of inflation as the year draws to a close.
The 8.7% figures by which the 2023 COLA will be increased were based wholly on federal government figures for the same quarter that was published by the Dept. of Labor in September. The figures, which were recently analyzed by The Senior Citizens’ League, revealed that the COLA will be down from the figure that was earlier expected which was 9.6%.
This decrease in the COLA figures is down to the fact that with the passage of the year, the inflation rate has shown a slowdown leading to the COLA being lower than what experts had earlier anticipated it to be.
For the Senior Citizen League, this is a major issue as the COLA may not reflect the decline in the purchasing power that was experienced by seniors starting even earlier than 2022. And with the war in Europe dragging on and threatening to escalate in 2023, there could be a sustained disruption in food and energy costs in the coming year. this will have a huge negative impact in a way more significant way on the SSI beneficiaries as they have a fixed income.
The 8.7% COLA Social Security Adjustment With Boost Average Checks To $1,801
In 2022, the average payments received by disabled and retired individuals under the SSI was $1,657 a month, and with a COLA increase of 8.7%, the increase will be significant at $144, increasing to an average of $1,801.
The increase will start with the benefits going out to over 65 M Social Security beneficiaries in the first month of 2023. Over 7 M beneficiaries of the Supplement Security Income will get the increased checks beginning on December 30, 2022.
Thanks to the unusual oddity, beneficiaries of the Social Security payments will realize the total COLA adjustment increase. In earlier years, the annual adjustment rate was consumed by the cost of Medicare Part B, which is the part of Medicare concerned with payment to doctors and hospital outpatient services.
But Medicare premiums are expected to stay flat and might even decrease in the next year as a large increase in 2022 was linked to a new calculation in the cost of the treatment of Alzheimer’s.
A Senior Citizen League policy analyst said that beneficiaries who continue to draw fixed income were the most affected by the 4-decade high inflation rates, as the benefit payments have failed to keep pace with rising prices in 2022.
For a majority of the beneficiaries, the increase in 2023 will fall way short of what the recipients will need to catch up with the increase in the price of food and other consumer goods across the spectrum.
At present, as many as a third of participants surveyed by the League have revealed that they received much lower income assistance earlier in 2021. That shows a doubling of figures from 16% earlier who revealed that they were profiting from need-based assistance before the pandemic. this shows that Social Security payments were never intended to be the sole income source for people.
Most recipients of Social Security payments will experience a boost in the payments as the benefit amounts begin to be credited to their accounts starting in January 2023. Beneficiaries, depending on which programs they receive their funds, will have their payments hitting their bank accounts on various days.
The payments are linked to the birthday of beneficiaries with those having their birthday between the first and the tenth getting their Social Security payments on the second Wednesday.
Beneficiaries with birthdays between the eleventh and the twentieth will receive their Social Security payments on the third Wednesday while those with birthdays between the twenty-first and the last day of the month will receive their payment on the fourth Wednesday of the month. The Supplemental Security Income payments come in on the first day of every month.