Social Security benefits 2023 could bring retirees an extra $1,800. Infact, there is one drastic change is coming in Social Security benefits 2023. Social Security benefits will increase in 2023 with a COLA adjustment. More inflation-enhanced Social Security checks and, yes, hope for relief from the headaches of high prescription drug costs are on the horizon. And for many retirees, the budget relief can’t come fast enough.
Inflation is brutal for lower-income consumers, including millions of retirees who have little or no savings to draw on as the cost of gas, groceries and rent climb ever higher.
But thanks to soaring inflation, those receiving Social Security benefits can look forward to a Social Security pay-out that’s about 8 to 9% higher in 2023, according to early estimates.
- Another $1,800 a Social Security benefits 2023 could be up front
- Social Security benefits 2023 will be highest paid in the history
- Many years have brought considerable Social Security benefits 2023
- What was the Social Security Benefits 2022
- The actual Social Security COLA Benefits 2023
- COLA can be reach as high as 9.7% in 2023
- Every extra dollar counts in retirement.
- Inflation creates additional uncertainty
- SSA Notes on Social Security Benefits 2023
- Impact on Medicare & Premium costs due to Social Security Benefits 2023
- Social Security benefits 2023, it is possible that the increase will be smaller or maybe even flat.
On average, a retiree could see about an extra $150 a month — assuming a 9% cost-of-living adjustment to Social Security next year — based on the example for current benefits of about $1,656 a month. The cost-of-living adjustment in this example would be an additional $1,800 per year.
We have to wait until October for the official cost-of-living adjustment for 2023 that the Social Security Administration will announce.
“It will be one of the highest COLAs ever paid in the program’s history,” predicted Mary Johnson, a Social Security policy analyst for The Senior Citizens League, a non-profit advocacy group.
Based on consumer price index data for the year to July, the COLA adjustment could be around 9.6% if inflation continues at a similar pace.
If inflation heats up in the coming months, the Senior League estimates that adjustment could jump a bit to around 10.1%.
If inflation cools more in the coming months, the adjustment would narrow and could end up in the 8-9% range, according to estimates.
Only two months of consumer price data – August and September – remain to calculate the adjustment. September data is due to be announced on October 13 by the US Bureau of Labour Statistics.
The inflation adjustment for Social Security benefits was very high at 5.9% in 2022. The cost-of-living adjustment began with benefits payable to more than 64 million Social Security recipients in January 2022.
But you would have to go back to 1979, 1980 and 1981 for any inflation adjustment that was 9% or higher. The highest COLA was 14.3% in 1980.
Johnson said the deepest impact of inflation is felt by those older adults who don’t take home any pay check, even a small one; as well as seniors who have no pension or savings.
“Every COLA makes sense,” Johnson told the Free Press, “Because Social Security is one of the only forms of retirement income that is adjusted for inflation.”
If you need about 10% more money now, for example, to buy the exact same groceries and other items you bought a year ago, you’ll use up whatever savings you have much faster.
While you can cut some of your spending by switching to generic brands, eating less meat, or going out to lunch less often, everything we buy is discretionary and can’t be scratched off the shopping list.
Inflation was high last year – and will soar even more in 2022. July showed improvement as the month-on-month change was flat, partly reflecting a 7.7% drop in gasoline prices in the month.
However, pensioners have not been able to keep up with inflation this year because many pensions are not adjusted for inflation – and many pensioners have no pensions at all.
While the inflation adjustment for Social Security benefits helped this year based on the 2021 data, for example, it did not reflect all of the continued inflationary pressures in 2022.
Inflation is running at a much hotter pace than the 5.9% inflation adjustment provided in 2022 to retirees and people receiving Supplemental Security Income, which is paid to people with disabilities or blindness whose income and resources fall below specific limits.
In the 12 months ending in July, the consumer price index rose by 8.5%. Year-on-year in June, the inflation index rose by 9.1%.
“The actual COLA that we’ve received falls short of actual inflation,” Johnson said. The group estimates the shortfall is about $58 a month on a monthly Social Security benefit of $1,656.
Some of that could even out a bit here in 2023.
“With the next COLA that we get, we may be in a little better position,” she said. “I don’t know how long inflation will continue at the current rate.”
Richard Johnson, director of the Pension Policy Program at the Urban Institute, said no one can say for sure how much Social Security benefits will increase in 2023.
Assuming that energy prices continue to fall in August and September as they did in July, which Johnson said seems likely, and that other prices continue to rise at recent rates, Johnson estimated that next year’s Social Security COLA will be 8.7%.
COLA can be reach as high as 9.7% in 2023
If energy prices hold steady over the next two months, COLA could reach as high as 9.3%, he said.
“The increase will do a lot to help seniors, especially those who are most dependent on Social Security,” he said.
“But this adjustment will only put them back to where they were at the beginning of the year, before prices really took off. Every time prices go up in 2023, they will continue to lag.”
Johnson noted that Social Security’s cost-of-living adjustment doesn’t perfectly reflect how Social Security recipients spend money to cover their expenses because the index is tied to spending by city employees and administrative workers, who are mostly too young to choose Social Security.
Overall, “seniors have actually done a little bit better in terms of inflation than younger people,” Johnson said.
He noted that the Bureau of Labour Statistics calculates an alternative index reflecting the spending of people age 62 and older known as the Consumer Price Index for seniors, which gives less weight to transportation and more weight to medical care and housing than the standard rate of inflation.
Johnson said the Consumer Price Index for seniors has risen slightly less than the standard Consumer Price Index over the past 10 months because it gives less weight to transportation and energy. Of course, energy prices have risen tremendously over the past year.
Some seniors have benefited because prescription drug prices have only increased 2.8% over the past 12 months, Johnson said, much less than the overall rate of inflation.
Every extra dollar counts in retirement.
The problem for many households, including those headed by some retirees, is that personal savings are extremely limited to cover all those higher prices at the grocery store and elsewhere, prices that are unlikely to drop even if the rate of inflation cools.
About 48% of households headed by someone age 55 or older had no retirement savings in 2016, according to research published in 2019 by the U.S. Government Accountability Office.
Some of these families might have a pension that can help them secure a monthly income, but the same study showed that 29% of these households had no pension and no retirement savings.
Inflation creates additional uncertainty
Not surprisingly, according to the 2022 Retirement Confidence Survey by the Employee Benefit Research Institute and Greenwald Research, perhaps half of retirees who feel less confident about their ability to live comfortably in retirement blame inflation for triggering more anxiety.
Inflation hasn’t been a fear for decades, but now those who are retired or planning to retire must consider what higher prices mean for their 401(k) or limited savings.
One key point: If you’re at least 62 in 2023, you’ll automatically benefit from next year’s COLA increase — even if you haven’t yet claimed Social Security benefits.
Inflation adjustments are built into future payments each year until you claim benefits if you are 62 or older in 2023.
The Social Security Administration notes, “You’re eligible for a cost-of-living increase starting the year you turn 62. This applies even if you only receive benefits at your full retirement age or even at the age of 70.’
Ultimately, it would do a lot to get inflation and some costs back under control.
After soaring to a record $5.22 a gallon in June, Michigan pump prices are finally falling to near levels last seen in April, according to AAA Michigan.
Michigan drivers now pay an average of $3.95 per gallon, according to AAA data released Aug. 15. That’s down 77 cents a gallon from a month ago, but up 69 cents a gallon from last year.
Savings on gas can help consumers deal with other big bills like groceries and other necessities.
For retirees, the Inflation Relief Act of 2022 offers some hope that they will soon see relief from drug costs, but most of the changes are not immediate.
A new federal law caps out-of-pocket costs for Medicare-covered Part D prescription drugs at $2,000 starting in 2025.
One change in 2023: Starting next year, the new law caps co-payments at $35 per month per prescription for covered insulin products in Medicare Part D plans and for insulin delivered through an external insulin infusion pump under Medicare Part B, with no deductibles.
Many who get Medicare are worried about some higher premium costs in 2023. Retirees are often frustrated that their Medicare Part B premiums have been aggressively increased and limited to an inflationary adjustment to Social Security benefits.
But fingers crossed, pensioners may not face the same challenge next year.
Medicare Part B covers doctor visits and outpatient care, as well as some drugs. Changes to any Part B premium are likely to be announced in mid-November.
Last November, the Centres for Medicare & Medicaid Services announced that the monthly Medicare Part B premium rate would be $170.10 in 2022 — a 14.5% increase over the 2021 premium.
In May, US Health and Human Services Secretary Xavier Becerra announced that Medicare Part B premiums paid to Medicare beneficiaries for 2022 should be adjusted downward to account for overestimated costs associated with enrolling the new Alzheimer’s drug Aduhelm in Medicare. for compensation.
There has been no such adjustment this year, but many expect this situation to limit any potential increases in 2023.
No, the pain of inflation will not go away. But a few things could soon work in favour of retirees and others.