![]() If you're wondering how this is even possible, look no further than the CPI-W. ![]() Even though aggregate Social Security checks are rising over time, they're not coming anywhere close to keeping pace with the inflation aged Americans are actually contending with. ![]() In other words, what $100 in Social Security income could buy in 2000 can now only purchase $60 worth of those same goods and services. In fact, for more than 20 years, aged Americans have been getting the short end of the stick from America's top social program.īack in May, TSCL issued a report showing that the purchasing power of Social Security dollars has fallen by a jaw-dropping 40% since 2000. However, having their Social Security income gobbled up by rapidly rising prices is nothing new for retired workers. Retired workers have been getting the short end of the stick for over two decades In doing so, it all but ensures that the high-end estimate of an 11.4% COLA in 2023 is now off the table. With the price for crude oil falling and pain at the fuel pumps easing (if only temporarily), the prevailing inflation rate eased modestly in July. Bureau of Labor Statistics, one thing is crystal clear: Inflation is no longer outpacing analyst expectations. inflation rate continued to surpass expectations.įollowing the release of July's inflation data from the U.S. Mary Johnson, a policy analyst at The Senior Citizens League (TSCL), a nonpartisan senior advocacy group, opined in July that the 2023 cost-of-living adjustment could come in as high as 11.4% if the U.S. It's time to kiss that estimated 11.4% COLA for 2023 goodbyeįor the upcoming year, Social Security's beneficiaries - specifically, the 48 million retired workers receiving a monthly check - are expecting their largest "raise" in over four decades.Ī historically high inflation reading of 9.1% in June set the stage for what some policy analysts believed could be a double-digit percentage increase to Social Security checks in 2023. Historically high inflation eased a bit in July. If the average third-quarter CPI-W reading from the current year is higher than the average third-quarter CPI-W reading from the previous year, beneficiaries receive a raise that's commensurate with the percentage increase, rounded to the nearest tenth of a percent. Social Security's COLA is determined using only the CPI-W readings from the third quarter (July through September) of the current and previous years. This allows for countless categories to be summed up into a single number that can be easily compared to the previous month or year. The CPI-W has eight major spending categories and many dozen subcategories, all with their own respective percentage weightings. ![]() This is where economists breathe a sign of relief for acronyms. Thus, it's not a true raise in the traditional sense of the word.įor the past 47 years, Social Security's COLA determinant has been the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). "Raise" is in quotation marks to drive home the point that Social Security checks are increasing to keep payouts in lockstep with inflation. In simple terms, COLA represents the "raise" Social Security's more than 65 million beneficiaries receive most years to account for the rising price of goods and services (i.e., inflation). ![]() What, exactly, is Social Security's cost-of-living adjustment (COLA)? ![]()
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