It is in seniors’ best interests to become aware of the changes coming to Social Security. The good news is that the cost-of-living adjustment (COLA) for 2023 will increase about 8.7%. This means larger Social Security checks for struggling seniors.
Why the increase? The answer is inflation. COLAs are tied to the rate of inflation, this year an eye popping 8+%. Generally speaking, the COLA formula is based on the Consumer Price Index which in turn is based on the cost of a fixed basket of goods and services. The COLA is an important benefit that increases over time as prices increase.
A question frequently asked, however, is, “Does the CPI measure price changes of goods and services purchased by retirees?” It is no secret that older people spend more on health care and less on food and transportation than does the general population. It is also no secret that Social Security does not cover all the necessary expenses incurred by seniors.
The poverty rate among older Americans rose to more than 10% in 2021. This translates to about 6 million older adults.
There is far more to this tale which perhaps can be explored in the future.