6 Weeks Until Your Social Security Increase Is Announced: Here’s What to Expect

The countdown has begun. Within the next six weeks, many Americans will discover a number they have been looking forward to.

The Social Security Administration (SSA) plans to announce the cost of living (COLA) adjustment for 2023 in October. Although the agency has not yet set a specific date, it is likely to be around October 13, 2022. That’s when the Bureau of Labor Statistics publishes the September inflation data that will be used to calculate the COLA.

How big will your social security increase be? Here’s what to expect.

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Don’t set your hopes too high

First of all, don’t pin your hopes too high. No doubt some have predicted that the annual increase in social security will be close to 11%. Maybe it will, but don’t count on it.

The Committee of the Nonpartisan Organization for a Responsible Federal Budget (CRFB) has predicted that the social security COLA for 2023 could be nearly 11%. The actual estimate of the CRFB was 10.8%. However, this estimate was made a couple of months ago. It was also the upper end of a range. The lower limit of the range was 7.3%.

But things have changed since the CFRB made those projections. Inflation appears to have peaked. The SSA uses the Consumer Price Index for Urban Employees and Office Workers (CPI-W) to calculate COLAs. This metric decreased in July from the June level.

There are signs that inflation could be even lower in the third quarter. This is important, because SSA uses the third quarter average CPI-W to compare the same period average of the previous year to determine the next year’s COLA.

In particular, fuel prices, one of the main drivers of inflation, have fallen significantly. House prices are also falling for the first time in years. If these trends continue over the next few weeks, your Social Security increase may be lower than many have predicted.

A huge increase is still likely

While the upcoming COLA may not be as high as some projections, a huge increase is still likely. Inflation will not go away overnight.

If we only used CPI-W data from July 2021 and 2022, social security beneficiaries would be expecting a 9.1% increase. It would be by far the highest COLA since 1981.

Of course, July is only the first month of the third quarter. The SSA uses the average CPI-W of all three months in the third quarter. If the measure of inflation continues to decline in August and September at the same pace it did from June to July, the rise in social security would be close to 8.8%. Again, that would be the largest COLA in more than four decades.

Even if inflation fell more sharply, social security recipients would still get an increase in benefits of at least 7%. There has only been one year since 1981 with a COLA higher than that: the increase in 1982 was 7.4%.

Some more good news

Retirees may also be in store for more good news. Medicare Part B premium increases are expected to be much lower than in previous years. There is also the possibility that the rates will decrease.

In May, US Department of Health and Human Services (HHS) Secretary Xavier Becerra announced that Medicare Part B premiums should be “adjusted down” in 2023. This adjustment will be made because Medicare has decided. not to cover the Alzheimer’s drug Aduhelm in most cases. The large increases in Medicare Part B premium for 2022 were largely due to the anticipated costs of this drug.

You’ll still have to wait six weeks or so to find out what COLA Social Security will be. It may take another few weeks for the Medicare Part B premiums to be announced in 2023. But retirees should definitely expect positive news on both counts.

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