I’m relatively new to retirement. When will we know how much next year’s increase will be? With inflation out of control, is there a chance it will be as unusually hefty as this year’s?
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COLA for 2023 will be based on the third quarter 2022 price changes from the third quarter of 2021 and will be announced in November of 2022. Given the Federal Reserve Board’s proposed interest rate hikes, it is unlikely to be as large as the 2022 COLA.
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“When will we know how much next year’s increase will be?”
You should have info toward the end of the year.
Howie52
You can figure that the raise will not cover what you experience as inflation - ever.
https://www.ssa.gov/OACT/COLA/colaseries.html
https://www.thinkadvisor.com/2022/03/15/inflation-is-burning…
https://www.forbes.com/advisor/retirement/cola-social-securi…
https://www.thinkadvisor.com/2022/03/25/alicia-munnell-chang…
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Ok. Got it. Thankye!
The first automatic Social Security COLA was 8 percent in 1975. The 1975 COLA wasn’t the largest bump in Social Security history since automatic annual increases went into effect. That came in 1980, when benefits rose 14.3 percent; an 11.2 percent increase followed in 1981.Oct 13, 2021 [Thank you, Mr. google.]
1980 was the first year I funded an IRA (at that time tax deductible) – I funded a $2,000 5 year CD paying 15% – In those days banks (at least in NY) also gave a gift when a new account was opened - a toaster, an electric fan, and so forth. My $2,000 CD got me in 1980 a crisp new $20 bill.
And those were kinda’, sorta’ the good ol’ days. 
halco
I’m relatively new to retirement. When will we know how much next year’s increase will be? With inflation out of control, is there a chance it will be as unusually hefty as this year’s?
Here. After being on the “entitlement dole” for going on 20 years, I’ve not seen rhyme nor reason for the % number that SS has used for the increases. I’m certain it has a lot to do about not “busting the budget”.
Important financial impacts that we all have in our daily lives are excluded from the calculation. If I thought it would make a difference, I’d look up the exclusions. I’ll leave that as an extra credit assignment to readers.
Now that we’re retired (SS folks interpret that as “retarded”), we’re just suppose to remain seated and enjoy the ride. And be thankful for whatever they deem is appropriate for our next year’s dole.
Welcome to the world of ‘entitlements’.
https://www.fool.com/retirement/2018/01/20/social-securitys-…
Just some food for thought on social security.
nag
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Social Security COLA announcement dates for the past 3 years have been:
For 2022: Oct 13
For 2021: Oct 13
For 2020: Oct 10
The SS COLA is based on the CPI-W, or the Consumer Price Index for Urban Wage Earners and Clerical Workers. This metric became the required inflation factor effective beginning 1975. Interestingly, only the CPI-W reported for July, August and September are used, which are added up and divided by 3 for a 3-month average. This is then compared to the average CPI-W values for the same 3 months of the previous year and the increase is calculated. Here are the CPI-W numbers for the 2022 COLA.
Year July August Sept avg % change = SS COLA for 2022
2020 252.636 253.597 254.004 253.412
2021 267.789 268.387 269.086 268.420 5.92%
Its then rounded to the nearest 1/10th %
As mentioned previously, if the Federal reserve can boost short Fed Funds rate up high enough, this could slow the economy sufficiently by summer to reduce the July/Aug/Sept values enough to keep the COLA from getting too high. So far, this single 25bp Fed rate increase doesn’t seem to have had much of an effect as the avg increase in the CPI-W for Jan & Feb show an 8.4% increase for 2022 over 2021, and this wasn’t due to just oil prices which increased 7,9% and 5% respectively over this period. But we’re still early and haven’t seen the effect of a higher fed rate hike.
Also, keep in mind the SS COLA increase must be corrected by the increase in the Medicare part B premium, which as we saw, can be significant, depending on one’s SS benefit amount. For example, an individual with a monthly benefit of $1,500 saw SS benefit increase of $88.50. But the Part B premium increase in going from $144.60 to $170.10, or an $25.50 monthly increase. This effectively reduced the SS COLA increase by about 29% down to a net $63/month. This % reduction will be greater the lower the monthly SS benefit.
And there are several groups who track the CPI-W and so predict what the SS COLA for the next year will be, to include AARP, The American Society of Pension Professionals and Actuaries and the Senior Citizen’s League, to name a few. They usually start predicting at the end of July.
BruceM
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CNN has a report that says we may get around a 10% increase next year. Woo-hoo! Man, that would help me a lot a lot.
https://www.cnn.com/2022/07/14/politics/seniors-social-secur…
I am not convinced that will be reality. I don’t see how, financially, that is a possibility.
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Hi halco,
“CNN has a report that says we may get around a 10% increase next year. Woo-hoo! Man, that would help me a lot a lot.”
While the gross benefit may increase, I suspect the Medicare payments will increase also and chew into that 10%.
Gene
All holdings and some statistics on my Fool profile page
http://my.fool.com/profile/gdett2/info.aspx
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"While the gross benefit may increase, I suspect the Medicare payments will increase also and chew into that 10%.
Gene"
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There is an article in the July/August AARP rag discussing last year’s Part B
price rise related to the Alzheimer’s drug - where Medicare didn’t respond to
Biogen’s 50% price drop or to their own decision to limit the approval for that
particular drug’s use. About half the Part B price increase was stated to not
have been necessary. They are supposedly going to “roll the savings into the 2023
premium”.
Can’t find a link to the issue. Read it in the paper copy but the article does not come up in
a search.
Howie52
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Here’s a Nasdaq article: https://www.nasdaq.com/articles/social-securitys-2023-raise-…
There’s also a chance they will raise the max amount on the social security tax along with the COLA…doc
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