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The social security cost of living adjustment could be 10.5% in 2023.

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Social Security recipients in 2023 will receive a record high cost-of-living adjustment due to inflation. The question is how high it can be.

Based on new CPI data for June released Wednesday, The Senior Citizens League, an unbiased group of seniors, now estimates a cost-of-living adjustment of 10.5% in 2023.

A 10.5% COLA would mean a $175.10 increase to the average monthly retirement benefit of $1,668, according to The Senior Citizens League.

By comparison, the group’s estimates over the past two months have shown that COLA could be 8.6% next year.

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This is because the consumer price index for all urban consumers, or CPI-U, rose 9.1% in June from the previous 12 months, the fastest pace since 1981.

Meanwhile, the measure used by the Social Security Administration to calculate COLA annually — the consumer price index for urban employees and clerical workers, or CPI-W — has risen 9.8% in the past 12 months.

Of course, next year’s COLA estimate is still preliminary. The Social Security Administration calculates the annual adjustment by taking the average of the data for the third quarter of the current year and comparing it with the third quarter of the previous year.

The actual increase for next year may vary depending on how high inflation is in the coming months.

“Looking ahead, there are a number of reasons why we expect these high prices to ease in the coming months,” White House press secretary Karine Jean-Pierre said at a press briefing this week.

According to The Senior Citizens League, if inflation declines in the coming months and is lower than the recent average, COLA could reach 9.8%. If instead it turns hot or exceeds the recent average, the increase in benefits could be 11.4%.

In 2022, Social Security recipients received a record 5.9% increase in benefits, the highest increase in about 40 years. Since then, however, inflation has picked up.

How much more money can recipients get

To find out exactly how much more money the projected increase will mean to you, multiply 10.5% by your total benefit amount.

Most beneficiaries received either in December or January, according to Mary Johnson, social security and Medicare policy analyst at the League of Senior Citizens.

How much more money beneficiaries actually see will depend on next year’s Medicare Part B premiums. Medicare Part B contributions are usually deducted directly from Social Security checks. These premiums are up 14.5% in 2022, bringing the standard monthly premium to $170.10 per month, one of the highest jumps in the program’s history, according to Johnson.

“The beneficiaries are still suffering from this,” Johnson said.

COLA increase could impact Social Security’s ability to pay

A higher COLA for 2023 may not only be good news.

Higher-income people may have to pay more for Medicare Part B and D benefits, Johnson said. Meanwhile, low-income beneficiaries may face a reduction in income-related benefits as their monthly checks increase, she said.

Jose Luis Pelaez Inc | Digital Vision | Getty Images

According to the Committee on a Responsible Federal Budget, a non-profit non-partisan organization, Social Security’s record high COLA for 2023 will also impact Social Security’s projected dates of depletion.

The Social Security Trustees’ annual report, released in June, projected that the program’s total funds would be depleted in 2035, after which 80% of benefits would be paid. This is based on mid-February data.

Using more recent inflation assumptions, the Committee on a Responsible Federal Budget projects Social Security insolvency in 2034 rather than 2035.

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