As the economy recovers from the epidemic, inflation often rises and begins at a record rate in 2022. Many fixed-income recipients of Social Security feel the sting of increasing costs right now, but the good news is that this high inflation could lead to another record boost in benefits.
Through the annual Cost-Of-Living-Adjustment, the Social Security Administration adjusts the amount it pays out in monthly payments to account for inflation (COLA).
One of the few sources of retirement income that accounts for inflation is Social Security.
On October 13, 2022, the US Bureau of Labor Statistics is expected to publish the Consumer Price Index for the month of September 2022. After the 2021 COLA was announced by the Social Security Administration on the same day that the third-quarter CPI data was revealed in 2020, Thursday, October 13, 2022, seems like a reasonable estimate for when the final 2022 COLA will be announced.
The Social Security Administration won't announce the exact #COLA for 2023 until October, but experts predict that benefits could increase by 8-10%. That would be the largest amount since 1981. https://t.co/EED69wsy8i
— Megan Loe (she/her) (@meganaloe) August 22, 2022
The projected increase in the cost of living allowance (COLA) could reach 10.5%, which would be significantly higher than the projected increase of 5.9% in 2022. Retirement policy program director at the Urban Institute in Washington, D.C., Richard Johnson, estimates a range of 9 percent as a “fair approximation.”
“It’s difficult to foresee the precise course that energy prices will take over the next few months. That’s the main thing that’s unclear to me right now.
How Is The COLA Calculated?
Any COLA adjustments are determined by the monthly release of the US Bureau of Labor Statistics’ Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The Social Security Administration takes an average of the monthly increases between the third quarter of the year before the COLA was implemented (2021 in this case) and the third quarter of the year in question (2020 in this case). Normally, Social Security payments would be issued on the first of the month, but because January 1 is a holiday, this month’s payment will be issued at the end of December.
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