The COLA and What it Really Means for 2023
2022 has been a tough year for many Americans. The cost of living increased and inflation hit all-time highs and money is the top source of anxiety for folks in the United States.
Inflation
Inflation is when there is a decrease in the purchasing power of money. You can track inflation by the rise of prices of goods or services. When there is a rapid rise in prices, such as what happened last year, inflation can become a serious financial concern. While no one expects to still pay the same prices that we paid in the 1950s, when prices start going up quickly it can affect all parts of daily life.
Due to this inflation, the Social Security Cost-of-Living Adjustment or COLA for 2023 is substantial. The move was a welcome one, especially since many senior citizens were affected by the high rate of inflation. Retirees were hit especially hard. With only a fixed amount of income coming in every month, and prices skyrocketing, it is understandable that older Americans were worried about how far their money would go.
Is it too little too late?
The Senior Citizens League found that while the 5.9 percent cost-of-living adjustment (COLA) in 2022 put more money into citizens' pockets, it wasn’t enough. The COLA increased the average payment for Social Security recipients from $1,564 in 2021 to $1,656 a month last year. However, when they compared the change to real inflation figures The 2022 COLA fell short by an average of 46 percent a month. The research found the average Social Security payment fell short by more than $508 for the full year!
2023 cost-of-living adjustment
According to the Social Security Administration recipients will get a major boost in 2023. If you receive Social Security benefits, then the 8.7 percent COLA–the highest in over 40 years- will be welcome news. The latest Cost-of-Living Adjustment will boost the average payment by $146 extra each month.
According to experts, inflation is beginning to cool, so 2023 looks better than last year, and 2024 is even more appealing. A survey by the Survey of Professional Forecasters projects a rapid slowdown of inflation to 2.9 percent in 2023, followed by a modest decline in 2024 to 2.3 percent.
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