Social Security benefits projected to increase significantly in 2023
In 2022, Social Security beneficiaries received a 5.9% cost of living adjustment (COLA) increase to their monthly benefits. The COLA is calculated each year and is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
Consumer Price Index records have revealed that inflation has risen by 8.6% over the last year. Therefore, in 2023, Social Security recipients are projected to receive an even larger COLA increase of around 8%.
On June 2, 2022, the chief actuary at the Social Security Administration, Stephen Goss, stated that the COLA would be closer to 8% as opposed to an earlier estimate of 3.8%. The COLA is officially announced later in the year and is subject to change based on the rate of inflation in July, August and September.
In 1981, the Social Security Administration announced an 11.2% increase in benefits, and there has not been as high of an increase announced since then. An 8% increase would be the largest one seen in several years.
A senior advocacy group, the Senior Citizens League, estimates that there will be an 8.6% increase, which would mean an increase of over $140 in monthly benefits.
There is concern that a significant COLA increase could have an adverse impact on Social Security’s trust funds. Every year the Trustees of the Social Security and Medicare trust funds release a report on the financial status of the two programs.
The trustees annual report states that the trust fund that covers retirement and survivors’ benefits is projected to deplete in 2035. Individuals will still receive benefits after the trust fund is depleted, but they will only receive 80% of their benefits, unless Congress passes legislation to address this problem.
Regarding Medicare, the report stated that the Hospital Insurance Trust Fund, which covers hospital bills, is projected to be depleted in 2028. On the other hand, reports on the trust fund for disability insurance, have stated there are sufficient funds for the next 75 years.