Cola Predictions 2023 - What is the latest Social Security COLA forecast for 2023 after the June CPI?
Inflation takes its toll on households across the United States, none more so than those on fixed incomes. June's consumer price report confirmed what Americans are seeing as prices continue to rise rapidly.
Cola Predictions 2023
The 9.1 percent gain reported Wednesday was more than last month's peak, which many expected to be the peak. This has also prompted those projecting the potential annual cost of living change (COLA) for 2023 to raise their estimates. Although the beneficiaries won't be announced until the fall, they're anxiously awaiting how much their monthly wages will compensate for the decline in purchasing power, which is estimated to be 40 percent lower since 2000.
Things To Know About The 2023 Social Security Cola
Last year, the Social Security Administration announced a historic 5.9 percent COLA for 2022. If the rate of inflation does not drop significantly, next year's increase is likely to be larger.
The Senior Citizens League, the largest senior citizen advocacy group, is projecting a 10.5 percent COLA for 2023 after the June CPR. It is the largest since 1981, when the United States had another period of inflation. That's a big jump compared to forecasts two months ago, when the siors representative group estimated the COLA at 8.6 percent.
The Committee for a Responsible Federal Budget, a non-profit, nonpartisan organization, released its own forecast of 10.8 percent ahead of data on June price changes. The final calculation is based on inflation data collected in the third quarter of the year.
The consumer price index data for June exceeded expectations for the easing of inflationary pressures. What keeps inflation under control? Presented by @CMEGroup pic.twitter.com/wclSvglJ8A — Bloomberg Quicktake (@Quicktake) July 13, 2022
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Therefore, depending on the impact of the Federal Reserve's aggressive rate hikes and other economic factors on inflation, the final COLA for 2023 may be higher or lower than projected. The civil union sees a 2023 COLA range of 11.4 percent if the economy remains hot, and 9.8 percent below if it cools or falls below the actual average cost of living.
The average Social Security pension will be about $1,669 in June, and the 10.5 percent COLA will increase to more than $175 next year. However, increases in Medicare payments, which come directly from Social Security benefits, can eat into potential benefits.
Solving the social fund is also a problem. Without government action, the program must start cutting 20 percent over the next three years, which the treasurer announced in June. However, based on inflation-adjusted data, the federal Committee for a Responsible Budget estimates the money will run to zero by 2034, a year earlier. it affects some readers.
Some readers are starting to focus on the 2023 COLA and how it will affect their retirement income. The rising cost of living is already affecting the country's state of mind. Questions about the size of the COLA for 2023 and how it may affect future federal pensions are raising questions for readers.
Inflation May Lead To 7.6% Increase In Social Security Benefits Next Year, Analyst Says
Last year's full COLA of 5.9% (which began paying in January) was the largest COLA in 40 years. The 2023 cost of living increase (COLA) will likely erase that 40-year record.
The last time the annual COLA was higher than in 2022 was in July 1982. At that time, a different COLA system was in use. In 1982, the COLA was 7.4 percent. For those interested in history, President Carter left office in 1981. The largest COLA was in 1980 while he was still in office. That year, the COLA was 14.3 percent.
If you remember hearing songs like "Hurts So Good" (John Mellencamp) on the FM radio; "Love was a little hard for me" (Juice Newton); or "Eye of the Tiger" (Survivor) maybe you didn't pay much attention to inflation. These are some hits from July 1982. On the other hand, you may be at or near retirement age, and unlike 1982, which was an interesting year, the annual COLA clock may be more interesting today.
Last year, as reported in June, the Senior Citizens League estimated the COLA at 5.3 percent. This turned out to be lower than the actual COLA figure of 5.9 percent as the cost of living continued to rise. COLA projections for 2023 may prove too low as inflation continues to accelerate.
Seniors Can Forget About Getting An 11% Social Security Raise In 2023
Of course, this number can change. If inflation continues unchanged, President Biden may have a lasting reputation as a president with inflation matching President Carter's pace more than 40 years ago. The administration and the Treasury are trying hard to prevent this, and interest rates have already risen as part of this effort.
But for readers collecting Social Security and/or federal benefits, keeping an annual COLA estimate has financial implications that make it worth considering.
For Social Security Retirement System (CSRS) benefits, the increase percentage is applied to the monthly benefit amount before the reduction ends. Payments are rounded to the next whole dollar.
Of course, there are exceptions to these calculations. As the Office of Personnel Management (OPM) notes, "Benefits will not be increased if it causes the carrier to earn more than the statutory limit."
Historic 8.7% Social Security Cola Finalized For 2023
For those asking how to determine the 2023 COLA, your answer depends on many variables, such as the pension system you are applying to, how many months you started paying into the pension last year, or FERS specials. for you, your age, etc.
Be sure to watch the video that explains the COLA calculation process in more detail, and if you need help in your own situation, ask your agency's human resources office and/or financial advisors who specialize in working with federal employees.
Readers have asked various questions about retirement and the 2023 COLA. For example, some readers are wondering if they should retire in December — in time to take advantage of the 2023 COLA. When deciding based on who gives the most money.
In other words, if you're planning to retire in November to get your full COLA for 2023, you're going to be disappointed. You may receive a small annual COLA adjustment to your salary if you are unpaid for a year.
Social Security Increase 2023: Here's The New Forecast As Inflation Eases
Also remember that retirement age is based on the "high 3" years of federal wages. The 2023 federal wage increase will likely begin with a pay review in January 2023. The higher wages will be paid to current federal employees on a month-by-month basis. The final figures for the 2023 federal pay increase and the corresponding 2023 General Schedule (GS) pay scale will not be released until later this year, usually in mid-December.
© 2023 Ralph R. Smith. All rights reserved. This article may not be reproduced without the express written permission of Ralph R. Smith.
Ralph Smith has decades of experience in federal personnel matters. He has written extensively on human resources in books and magazines and is the founder of two federal human resource bureaus and journals. Follow Ralph on Twitter: @RalphSmith47
AFGE Annuity Backlog Negotiating Budget COLA COVID CSRS Data Breach Donald Trump's Election Labor Relations Executive Order FEGLI FEHB FERS FLRA GAO Government Shutdown Schedule Hatch Act Holidays Inflation IRA IRS Communications Employees Pay Centers Medicare MSPB Office Hours OPM Remote Work Social Security Payments Unions VA Vaccinations Whistleblowe Millions of people in the United States are struggling financially and not no one else is when it comes to his pension and social security contributions.
Social Security Benefits 2023 Update As Cola Set For Huge Increase
The 2022 cost-of-living adjustment (COLA) increase to 5.9 percent is the largest annual increase in nearly 40 years, but the 2023 COLA is expected to be higher again.
According to the Senior Citizens League, recent inflation data shows that the COLA for Social Security recipients could be 7.6 percent in 2023.
The COLA is calculated by looking at changes in urban wages and the Consumer Price Index for State Workers (CPI-W), based solely on third-quarter data, so
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