For years, seniors on Social Security have had to deal with subpar COLAs. Those low COLAs reduced beneficiaries’ purchasing power, causing financial stress.
This year, Social Security users got the 5.9% COLA they’d been hoping for, starting in 2022. The nonpartisan Senior Citizens League now estimates that the COLA for 2023 might be double that 5.9% increase.
Will Seniors Be Paid More in 2023?
Based on recent inflation data, the Senior Citizens League predicts a 7.6% COLA for Social Security recipients in 2023. COLAs are based on changes in the consumer price index for city workers (CPI-W).
They’re also based on third-quarter statistics, which means it’s too early to predict next year’s COLA.
So that 7.6% forecast is just that: a projection. But it’s based on facts.
A recent trip to the store or petrol station shows how much living expenditures have risen. So a 7.6% Social Security COLA isn’t out of the question.
But will the raise be enough to keep seniors’ buying power? That’s the real issue.
Even this year, seniors on Social Security are behind due to inflation exceeding their 5.9% COLA. And if seniors’ benefits do climb 7.6% next year, it will only be due to rising living costs.
Or, to put it another way, a 7.6% COLA will not make Social Security claimants richer. That’s the issue with hefty COLAs: they’re justified by increasing living costs. So when benefits grow, seniors gain little.
A Better Method to Win
Since even high COLAs typically fail to keep seniors’ purchasing power, having money in retirement is a preferable option. They can’t go back in time and accumulate huge nest eggs.
Those still working can save to prevent becoming unduly reliant on COLAs or Social Security income in general.
Saving $300 a month for 30 years might yield a $408,000 nest egg if the portfolio yields an average annual return of 8%.
This return is somewhat below the market average, therefore it’s suitable for a 30-year investment window.
Meanwhile, the size of next year’s Social Security increase is unknown. The reality is that seniors who rely on Social Security for the majority of their income are likely to suffer and have few financial options.
Most Retirees Ignore the $18,984 Social Security Bonus
Like most Americans, you’re behind on your retirement savings. But a few “Social Security secrets” may help you increase your retirement income. For example, one simple method might add up to $18,984 each year! After learning how to optimise your Social Security benefits, we believe you may retire with the confidence we all seek.