2023 Social Security Increase on the Horizon

Take-Away: With rampant inflation, some predict an 8.9% increase in Social Security retirement benefits for 2023.

Background: The Social Security retirement benefits are adjusted annually,  calculated on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or the CPI-W Index. In 2022 the increase was 5.9%. Currently, the Index has increased 9.4% over the prior year. The final adjustment to the monthly retirement benefit will announced in October of 2022.

Estimated 2023 Increase: The Senior Citizen League, a nonpartisan group that focuses on issues that relate to older Americans, recently estimated that that the adjustment to Social Security retirement benefits might go as high as 8.9%, based on the March inflation information which showed that consumer prices increased by 8.5% from the prior year. That was the highest year-over-year increase since 1981. The Senior Citizen League had earlier projected an increase of 7.6%.

Conclusion: While it is too early to predict the final adjustment to the 2023 Social Security retirement benefit, with some now thinking that inflation has peaked, we still have supply chain issues to contend with, COVID resurfacing in places around the globe, and a war in the Ukraine to churn the markets in 2022. In addition, in the event that the Social Security retirement benefit is increases by 7% to 9% for 2023, what will be its impact on the nation’s rapidly dwindling Social Security retirement fund?