Social Security 2023: Cost-of-Living Adjustments Aren’t Enough To Pay Higher Costs for Seniors
After months of speculation, the Social Security Administration released the exact numbers for the 2023 cost-of-living adjustments (COLA) today. The 8.7% increase reflects the percentage of funds that will be added to recipients’ monthly benefit payouts, starting in January 2023, affecting the 66 million Americans that are part of the program.
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Social Security: 2023 COLA to Rise 8.7% for its Biggest Gain in Four Decades
The Social Security Administration assesses these annual increases based on data from the Consumer Price Index, which tracks the rates of inflation that American consumers are paying for necessities like food, housing and utilities.
The 2023 COLA will give seniors an added benefit, on average, of $144 for individuals and $240 extra for couples filing jointly, according to Forbes.
But is that enough? Though the 2023 COLA will be the biggest adjustment to Social Security in four decades, says CBS, recalling the 11.2% increase in 1981, some senior advocates say the latest increase won’t be enough for seniors already struggling with bills to keep up with rising inflation.
For example, just looking at the latest CPI data, food is up 11.4% since this time in 2021, gasoline is up 18.2%, heating oil is up 58.1% and shelter and medical care are up 6.2% and 5.6% respectively. So a COLA of 8.7%, advocates say, just won’t cut it to cover the bills for these basic necessities every senior needs.
There’s also the issue that some Medicare plans will be increasing in cost in 2023 — though Medicare Part B will have lower deductibles and premiums, Medicare Part A will have spikes for coinsurance, hospital stays and skilled care facility service, says CNET.
In fact, Forbes spoke to experts who say the whole COLA calculation model needs a much-needed overhaul. “The metric of inflation used to determine the COLA–the CPI-W–doesn’t accurately reflect how retirees spend their money,” says the article. “While the CPI-W considers the prices of a variety of consumer goods, including health care spending, critics say it doesn’t adequately represent the needs and spending patterns of America’s retirees.”
The article adds that some advocates are lobbying Congress to use the consumer price index for the elderly (CPI-E) to assess COLAs, since it tips the balances for things like medical spending a bit more.
The other issue, per the Forbes article, is that the COLA rate has been severely behind for years, so even though the 2023 increase seems high at 8.7%, that’s not factoring in the fact that between 2016 and 2021, the total COLAs for all years combined was only 8%, and 2016 had no increase at all. The 2022 COLA was a bit higher at 5.9%. Yet with ongoing pandemic effects and record inflation, it just may not be enough to keep up with the cost of goods as they stand now.
A report by The Senior Citizens League released in May of this year, found that Social Security benefits lost 40% of their buying power since the year 2000. The study conducted by the group also found that while COLAs have increased the payout of benefits by 64% since 2020, expenses for seniors in that time have risen 130%.
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Furthermore, a monthly amount of $1,876 would be needed “just to maintain the same level of buying power as in 2020,” the report says, but even with the projection for the 2023 adjustment, the average monthly payout for individuals is still only $1,801.
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This article originally appeared on GOBankingRates.com: Social Security 2023: Cost-of-Living Adjustments Aren’t Enough To Pay Higher Costs for Seniors
