Inflation began to cool in July, but the nonprofit advocacy group said it expects the highest Social Security living-adjustment (COLA) since 1981.
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It appears in an emailed statement by Mary Johnson, Social Security and Medicare policy analyst for The Senior Citizens League (TSCL), based on new Consumer Price Index for Urban Wage and Clerical Workers (CPI-W) data through July. COLA for 2023 will be 9.6%.
If inflation is ‘hot’ or higher than the recent average, the COLA could be 10.1%. If inflation is ‘cold’ or below the recent average, the COLA could be 9.3%,” he said. In turn, the COLA increases the average retiree benefit by $159 to $1,656, according to TSCL.
Over the past 12 months (CPI-W) has increased by 9.1%. For the month, the index fell a seasonally adjusted 0.1%, according to the Bureau of Labor Statistics (BLS), which released its CPI on July 10 on August 10. All items were indexed for the 12 months ending July. Lowered to 8.5%, mostly due to falling gas prices.
As the Social Security Administration (SSA) is set to announce a COLA on Oct. 13, 2022, Johnson said, “there is only two months of consumer price data left.” The lack of benefits that Social Security beneficiaries are experiencing in 2022 is because inflation is higher than their 5.9% COLA,” Johnson said. “Based on inflation through July, we calculate that the $1,656 benefit is down an average of $58 per month and a total of $373.80 year-to-date.”
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COLAs are based on increases in the CPI-W. “The COLA effective for December of the current year is equal to the percentage increase (if any) in the CPI-W from the average of the third quarter of the current year to the average of the third quarter of last year. The COLA became effective, according to the SSA website. If there is an increase, it must be rounded to one-tenth of a percent.
The latest COLA for 2022 is 5.9% for Social Security benefits and SSI payments.
Johnson, addressing the Inflation Reduction Act — which allows Medicare to negotiate drug prices and limit out-of-pocket costs to $2,000 — said prescription drug costs are one of the fastest-growing expenses facing retirees.
“One thing that bugs us right now is the claim that the Inflationary Reduction Act will take $300 billion out of Medicare, Johnson said. “No tears here. Yes, it does, and that’s great because this legislation cuts high drug prices by nearly $300 billion over ten years. That represents a savings for taxpayers and, more importantly, a savings for Medicare beneficiaries on their share of prescription drug costs. The Senior Citizens League strongly supports this legislation.
Johnson said that “unaffordable cancer drug prices have led to economic hardship, and deteriorating health has also killed some older Americans who may not have enough resources to pay for their drugs today.”
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Additionally, the prescription drug provisions in the bill received overwhelming support in a new Senior Priority Planning survey, with 79% of survey participants supporting it, Johnson said.
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This article originally appeared on GOBankingRates.com: 2023 Social Security COLA Expectations to Reach 9.6% Following Latest Consumer Price Index Report