As you know, each year, Social Security benefits are calculated based on a cost-of-living adjustment (or COLA). So what exactly is causing these soaring prices and what factors will have an impact on benefits next year? At the end of the day, where the COLA ends up depends on the status of the consumer price index towards the end of the year. For March, the index surged by 8.5% mainly due to the Russia-Ukraine war and the supply still failing to meet the demand across the board. As a result, that has The Senior Citizens League revising its 2023 COLA estimate, now projecting it will rise to about 8.9%, according to multiple reports in the media.
Now in 2022, the average Social Security benefit is currently $1,657, while the maximum is $4,194 a month. The 8.9% increase would mean that the average benefit would climb to about $1,804, whereas the maximum would jump by roughly $373 to $4,567.Previously, the Senior’s Citizen’s League estimated that the 2023 COLA would rise to just 7.6%. But keep in mind, things could change even further in a few months, as the Social Security Administration normally announces next year’s COLA in the fall. In efforts to curb inflation, the Federal Reserve has started hiking interest rates, which aims to calm down the demand by making borrowing more expensive. The Fed is not only expected to increase rates again in May by up to 50 basis points, but multiple times this year after that. Moreover, where inflation winds up could depend on if the Russia-Ukraine war continues to escalate. Pretty insane how a conflict half a world away can have such a dramatic and negative impact on the integrity of seniors’ future benefits.
In other news, If you have been unable to enroll in Medicare since the start of 2022 because of problems with the Social Security Administration’s phone system, you can ask for extra time to sign up, even if your initial enrollment, special enrollment or general enrollment periods have passed. To enroll using this special “equitable relief,” visit a Social Security office or call 800-772-1213 to let workers know about the trouble you have had. For help with your options, you also can contact your State Health Insurance Assistance Program center. If you take advantage of this program, you will have until December 30th to enroll in Medicare. This additional time is especially important, since the annual general enrollment period, which had been a last-chance option, ended March 31st.