The Social Security Administration is expected to announce the 2023 COLA on Oct. To summarize: The Social Security Administration uses inflation data from July, August and September to calculate the official COLA. Johnson’s new COLA estimate is based on the most up-to-date inflation data available because of this, it is expected to be more accurate than the previous projections. Recent projections from Johnson and other industry experts pegged the 2023 COLA between 8.9% and 10.8%. 2022 SOCIAL SECURITY INCREASE UPDATEThe CPI-W for August was 8.7%.Įach month, Johnson uses the latest CPI-W figures from the Labor Department to update her projections. This specialized inflation rate is known as CPI-W, and it tracks prices for wage earners and clerical workers. However, when determining Social Security COLAs, officials use a slightly different metric in an effort to better account for how rising costs affect beneficiaries. This rate is known as the “headline inflation rate” and applies to most consumers. The Department said Tuesday that the inflation rate for the 12 months ending in August was 8.3%. The cost-of-living adjustment (COLA) usually takes effect in December and appears in beneficiaries’ January checks. To make its predictions, the Senior Citizens League uses the latest inflation data from the Labor Department, mirroring the official methods from the Social Security Administration. The Social Security Administration has announced that benefits for more than 70 million Social Security and Supplemental Security Income (SSI) beneficiaries will increase 1.3 in 2022. "Over the past 12 months, they rank food costs as their fastest growing expenditure, housing, and transportation in that order.Still, an estimated 8.7% raise would be significant, marking the largest COLA increase since 1981. "Across the board, retired and disabled Social Security recipients spend a bigger portion of their incomes on healthcare costs, housing, and food and less on gasoline," she said. What changes are coming to Social Security in 2021 The tax rate has remained constant. That would be the highest COLA by far since 1981. That's an item on which many people who received fixed incomes spend comparatively less money. In 2022, the cost-of-living adjustment (COLA) for almost 64 million Social Securityrecipients increased to 5.9, the highest rise in over 40 years. If we only used the July CPI-W figures from 20, Social Security recipients would be in store for an increase of 9.1. That's because the index that Social Security benefits adjustments are based on - the Consumer Price Index for Urban Wage Earners and Clerical Workers - is weighted heavily toward changes in gas prices. Still, the increase is likely to be inadequate for many beneficiaries, Johnson said. Moody's Analytics estimates the 2022 COLA at 5.6 percent. Rising prices Estimates for the 2022 COLA range from 5.8 percent from economist Bill McBride, who writes the finance and economics blog Calculated Risk, to 6 to 6.2 percent from The Senior Citizens League. "A COLA of 8.7% is extremely rare and would be the highest ever received by most Social Security beneficiaries alive today," Johnson said in a statement. The increase in benefits typically goes into effect in January. The Medicare wage base will not have a dollar limit for 2022. Mary Johnson, policy analyst and editor at the Senior Citizens League, said she is currently projecting an annual adjustment of 8.7%, which would be the biggest boost to Social Security benefits since 1981. As of January 1, 2022, the Social Security (full FICA) wage base will increase to 147,000.
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