Several media outlets have recently published stories on the prospects of a large hike in Social Security benefits in the new year, with projections of there being as much as a 10.5% percent increase in 2023.
The annual Social Security Cost of Living Adjustment (COLA) is tied to the Consumer Price Index (CPI). Calculations are based on the change in the CPI for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the previous year to the same period in the current year.
In calculating 2022’s significant COLA increase, the Bureau of Labor Statistics (BLS), who do the job of working it all out, compared the figures from July to September 2020 with those of the same months in 2021 and came up with the 5.9% increase that all beneficiaries experienced and probably appreciated at the start of this year.
The significant factor at the moment is the dates that are used. We’re obviously still only in July and we don’t actually know what the CPI-W will be this year. The predictions are based on what’s been going on in the first half of 2022, not the crucial third quarter. The figures for the year to date do however suggest a large, and potentially record-breaking, COLA.
Again, as in past years, we’ll get the true numbers in October once the BLS and Social Security have done what they need to do. You can be sure we’ll be publishing those facts on this page once the news is in.