As anybody who has stood at a gas pump filling their car’s tank knows, inflation is high—the highest it’s been since the summer of 1980 when it peaked at 14.5%. While recent government inflation data came in hotter than expected at 8.6%, we are still below that 1980 inflation figure.
Seniors and disabled Americans who qualify for monthly Social Security benefits may get some relief, however, in the form of larger monthly checks.
If record-high prices don’t recede, the Cost-of-Living Adjustment (COLA) for 2023 could eclipse this year’s 5.9% increase. Social Security Administration’s chief actuary, Stephen Goss, said recently that next year’s COLA could be “closer to 8%.”
Social Security laws stipulate that the amount of money paid to Americans who receive Social Security benefits (old age and disability) must be adjusted annually for inflation.
The Social Security Administration uses one of the subsets of the Consumer Price Index (CPI) called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) during the third quarter of the year (July, August and September) to calculate the Social Security cost-of-living adjustment. The precise COLA number and whether there will be a record high increase next year will depend on what happens to inflation numbers later this year.
Critics of the CPI-W say it is not an accurate measure of what seniors pay for goods and services. There are increasing calls from some Washington lawmakers for to change the measure for the annual increases to the Consumer Price Index for the Elderly (CPI-E) which they argue better measures the prices retirees pay.