About 64 million retirees currently receive income from the Social Security Administration (SSA). Each year, the organization takes a cost-of-living adjustment (COLA) and converts it into a percentage equal to the amount by which retiring employees’ monthly benefits will increase for the following year. And in all of this, there is one crucial date: October 13, 2022.
The announcement of the increase granted by the COLA is made in October and what is done is to take into account the percentage of inflation recorded in the months of July, August and September.
In other words, in general terms, if the price of a basket of goods and services increases, social security payments should increase at the same time to ensure that beneficiaries can continue to purchase the same goods and services. In short, the objective is to adjust the cost of living to inflation.
Throughout Social Security’s history, for the past 47 years, the Consumer Price Index for Wages and City Employees (CPI-W) has been the measure on which the Social Security Administration has relied to determine whether Social Security pensions will increase or decrease in the coming year.
While July, August and September inflation rates determine the Social Security COLA, the remaining nine months are taken into account in making calculations of the percentage by which 2023 benefits could vary.
What does this have to do with October 13, 2022?
On this day, the U.S. Bureau of Labor Statistics (BLS) is scheduled to release the previous month’s inflation results, i.e., h for the month of September, which remains to determine the amount at which the COLA would present in 2023.
Although this detailed data relates primarily to the Consumer Price Index for All Urban Consumers (CPI-U), a measure of inflation similar to the CPI-W, the BLS monthly report also includes the monthly value of the CPI-W, according to experts at The Motley Fool.
Simply put, this day would reveal the final piece of the COLA puzzle in 2023. So, October 13 will determine how much retiree monthly checks will increase through 2023.
Estimates to date speak of increases of between 9% and 11%, a percentage that will undoubtedly be historic. For 2022, the COLA was 5.9%.