Elders – Cost of Living Increase
The Social Security Administration (SSA) announced an 8.7 percent cost-of-living adjustment (COLA) for 2023, the largest inflation-fueled increase in benefits in more than 40 years.
Starting in January, the average monthly Social Security retirement benefit will rise by about $146, from approximately $1,681 to $1,827, according to the SSA.
The resulting increase, which is also applied to veterans’ disability benefits and retirement pay, is the biggest since 1981, when the COLA was 11.2 percent. The 2022 adjustment of 5.9 percent followed more than a decade of low inflation, with the COLA averaging less than 1.4 percent from 2009 to 2021.
The 2022 COLA, which increased the average retirement benefit by about $92 a month, was offset in part by a record $21.60-a-month hike in the standard Medicare Part B premium, which for most Medicare enrollees is deducted directly from Social Security payments.
2023 will see the opposite effect, with a larger COLA and a rare drop in premiums for Part B, the portion of Medicare that covers outpatient services such as doctor visits. Social Security beneficiaries will see more money in their pockets next year.
The Centers for Medicare & Medicaid Services (CMS) announced last month that the standard Part B premium will decline in January from $170.10 to $164.90 a month. The decrease reflects lower-than-expected Medicare spending on the new Alzheimer’s drug Aduhelm, savings the agency had pledged to pass on to consumers.
An inflation slowdown could also stretch the COLA’s effect on Social Security beneficiaries’ spending power. Whereas consumer prices have risen at a faster clip than the 5.9 percent COLA throughout 2022, forecasters predict inflation will cool in the year to come.
Global financial forecaster Trading Economics projects U.S. inflation to decline to 4.4 percent by mid-2023, and personal finance publisher Kiplinger predicts a rate of 3 percent to 4 percent at year’s end.
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John D. Miller is the founder/owner of Home Care Partners, LLC, a Massachusetts business providing private duty, personalized in-home assistance and companion care services to those needing help in daily activities and household functions.
Phone: (781) 378-2164