Is Social Security Going Up in 2023? The Good News for Retirees.

This article was originally published in September 2022.

  • Social security payments are set to rise for next year by a substantial margin.
  • Recent estimates from a nonpartisan senior citizens lobby suggests the cost-of-living adjustment could be 8.7% for next year.
  • However, the ultimate adjustment will depend on inflation data and expectations of where inflation heads in the future.
retirement stocks: a roadsign that says "retirement ahead". retirement stocks
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Right now, a lot of talk is happening around a potentially big cost-of-living adjustment (COLA) for seniors. For those in retirement, how social security payments are adjusted over time impacts millions of Americans’ budgets. Accordingly, with highly anticipated numbers coming on Oct. 13, all eyes are on where experts expect this COLA increase to land.

According to the Senior Citizens League, a nonpartisan lobby group for seniors, inflation data points to an 8.7% year-over-year (YOY) cost of living adjustment for seniors. That would be the biggest COLA in more than four decades — and one many seniors say is necessary.

Notably, this cost-of-living adjustment expectation has been lowered since earlier in 2022. The lobby previously expected a COLA of 9.6%, but has adjusted lower alongside guidance for decreasing inflation.

Ultimately, it appears it will be up to lawmakers to come up with the final number. Until then, here’s what investors may want to know about this year’s pending social security increase.

How High Will Social Security Payments Go This Year?

Ultimately, cost of living adjustments are tied to inflation, providing seniors with the ability to afford the same basket of goods over time. With inflation skyrocketing now, all eyes will be on upcoming consumer price index (CPI) data. That will have a great deal of influence over next year’s increase.

Projections can be difficult, and working with backward-looking data can complicate the process. Accordingly, while many expect inflation to cool, the rate of change with respect to how inflation is expected to cool is up for debate.

Thus, it’s probably too early to call an 8.7% COLA “locked in.” A lot can change in the matter of a few weeks. Still, seniors expecting higher social security payments appear very likely to see their checks grow significantly next year.

On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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