You can mark on your calendar, Oct 13, 2022, with a red circle if you get Social Security benefits.
On that day, the Social Security Administration (SSA) will probably reveal how much of a rise you’ll receive for the upcoming year. However, you needn’t wait until then to have a decent idea of what the subsequent COLA will be.
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Social Security Uptick: The Present Moment
The Consumer Price Index for Urban Wage Earners & Clerical Workers (CPI-W) averages for the third quarter of the current and preceding years are compared to determine the annual COLAs. Your Social Security benefit will rise in line with the percentage yearly increase (if any).
One method is to merely compare the mean of the CPI-W for the first 2 months of Q3 in 2022 and 2021 to calculate what the COLA could be as of today. Your Social Security benefits rise for 2023 might be 8.9% if you adopted this strategy. The CPI-W will likely be the same in September as it was in August, which is another approach. A COLA of 8.7% would result from this computation.
According to the patterns, inflation has slightly slowed down during the last few months. There is cause to believe that the pattern will hold. Fuel costs have decreased.
The cost of housing has also started to drop. What may the Social Security increase be if the rate of inflation drops precipitously this month? The mean score for Q3 2022 might theoretically be lower than average for the exact duration in 2021 if the CPI-W declines by such a large amount. In that case, Social Security beneficiaries would not be eligible for a COLA in 2023.
The likelihood of this situation occurring, however, is extremely low. In 1975, the SSA started calculating annual COLAs. Since then, November 2008 saw the CPI-biggest W’s monthly fall, which was 2.3%. Your Social Security benefits rise would be 7.9% if inflation decreases by the same proportion as this record reduction in September.
Large COLA whatever the case
Of course, it’s feasible that in September, the CPI-W will climb and buck the present trend. This would raise the Social Security rise above all of the previously given figures. Let anything happens to inflation this month, Social Security beneficiaries will almost certainly receive their largest COLA in 4 decades. Unfortunately, this rise might not be sufficient to fully offset the rise in living expenses.
Inflation differs significantly by region in the United States. The rise in payments for retirees won’t start until January, too. They might be forced to continue paying historically high costs for a variety of goods in the interim. No matter how huge it is, you might not be satisfied with the pop of the next big COLA reports Fool.
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