The 8.7% COLA that the SSA issued has been touted as the program’s most significant increase in decades numerous times. Although an 8.7% COLA may sound substantial, it is not the most significant Social Security benefits increase ever awarded. The most considerable increase since COLAs were introduced in 1975 substantially exceeded the 8.7% threshold.
Upcoming COLA
The fact that the COLA for the upcoming year would “only” amount to 8.7% may surprise some seniors who receive Social Security benefits. But because they are directly related to inflation, greater COLAs aren’t always good.
A lesser COLA than other experts had predicted indicates that inflation wasn’t as severe as some had anticipated. They’ve essentially failed in this area during the past few decades. The only way the 8.7% COLA for the following year will benefit retirees is if inflation declines.
Yes, Social Security beneficiaries may finally reach a point where their COLAs help bolster their finances if the rate of inflation reduces to, say, 5% to 6% by midyear.
We shouldn’t count on substantially lower inflation in 2023, though, given that previous measures tried to reduce inflation think fare increases on the portion of the Federal Reserve haven’t worked thus far. And if runaway inflation persists and drives a COLA in 2024 higher than 8.7%, it won’t come as a surprise.
Inflation Rise
Working Americans & retirees equally have had to deal with excessive inflation over the last year and a half. And that was surprising, given that the inflation rate had been stable until 2021.
One of their main grievances was that Social Security recipients’ COLAs were especially meager in the years until 2022. But there’s a rationale: higher increases weren’t necessary due to inflation.
In contrast, earlier this year, prices spiked to the point where some analysts predicted a COLA of up to 11% in 2023. Returning to the 8.7% COLA, though, It’s a significant increase over the 5.9% COLA retirees will receive through 2022, reports KOAM News.
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