With inflation running at an 8.3% annual rate as of August, Social Security beneficiaries are set to receive the largest cost-of-living adjustment in four decades.
Based on government data released Tuesday, the Senior Citizens League estimates that the annual inflation adjustment to Social Security will be 8.7% for 2023. That boost would raise the average retiree benefit of $1,656 by $144, according to the group, which lobbies for seniors.
The adjustment for 2022 was 5.9% and the actual increase for 2023 will be set by the Social Security Administration next month after inflation data for September is released. The annual adjustment is based on the change in a specific inflation measure, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), from the third quarter of last year to the third quarter this year.
The projected 8.7% increase for 2023 “is extremely rare and would be the highest ever received by most Social Security beneficiaries alive today,” the Senior Citizens League said in a press release Tuesday. Since automatic adjustments first started, the years from 1979 to 1981 were the only times the annual increase was higher. But the forecast change for 2023 is now lower than it was just last month, when the seniors group said it expected a 9.6% hike. The revised estimate is the result of a slight cooling in the government inflation data.
Medicare premiums projected to see little change: “Rising Medicare premiums often take a significant bite out of COLAs; the premium for Part B (which covers outpatient services, like doctors’ visits) typically is deducted from Social Security benefits,” Mark Miller if The New York Times explains. “Large increases in Part B can sharply reduce, or even eliminate, a COLA. But next year, most experts expect the standard Part B premium to rise very modestly, or even stay flat at the current $170.10 per month.”