It’s hardly a secret that inflation has been battering consumers since the latter part of 2021. And seniors on Social Security have been particularly affected by inflation.
At the start of 2022, Social Security benefits got a 5.9% cost-of-living adjustment, or COLA. At the time, that raise represented the largest one seniors had received in decades. But it also clearly hasn’t held up well in the face of soaring inflation.
At this point, seniors are eager to learn what their 2023 COLA will look like. And the good news is that the wait is almost over.
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Tomorrow is when the Social Security Administration is expected to put out an official COLA announcement. But will seniors be happy with that number — or disappointed?
Keeping expectations in check
Earlier this year, inflation was raging to such an extreme degree that some experts were calling for a 2023 Social Security COLA as high as 11%. At this point, a raise that high seems unlikely. But that doesn’t mean seniors won’t be happy with the final number — which, based on the inflation we have so far, could easily end up hovering somewhere in the 9% range.
Even if September’s inflation readings come in lower than anticipated, seniors are still very likely to see a 2023 COLA in excess of 8%. And when we compare that to the 5.9% boost they got at the start of 2022, that’s clearly a world of difference.
In fact, one thing seniors should keep in mind going into tomorrow’s big announcement is that a smaller COLA — meaning one between 8% and 9% — isn’t necessarily a bad thing. If anything, it would be indicative of the fact that inflation levels are finally dropping and living costs are starting to moderate. That alone should give seniors a fair amount of relief.
Furthermore, it may end up being the case that inflation continues to drop steadily following tomorrow’s COLA announcement. That would really be ideal, because if that happens, it means seniors might lock in a higher raise and then see their living costs decline at the same time. (To be clear, that decline in living costs would likely be gradual, but even a slow dip would be helpful at this point.)
Next year’s raise could go a long way
Not only is 2023’s Social Security COLA expected to be huge, but seniors should get to keep it in full. The reason? For the first time in years, the cost of the standard monthly Medicare Part B premium is finally going down.
Seniors who are enrolled in Medicare and Social Security at the same time have their Part B premiums deducted from their benefits. When Medicare Part B gets more expensive, which is usually the case, that increase eats into whatever COLA comes down the pike. But since Medicare Part B costs are decreasing in 2023, seniors should get a lot more buying power out of next year’s Social Security raise — no matter what the final number ends up looking like.
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