As inflation eases, it is increasingly likely that Social Security benefits will not increase as dramatically next year as it did in 2023. Retirees are looking at a cost-of-living adjustment in the 3% range less than half of a COLA increase in 2023, according to forecasts from the Senior Citizens League. The group monitors inflation data to forecast potential COLA changes in the future.
Another estimate is expected to be released on September 13 and could be higher or lower depending on the new inflation data for August. The exact percentage of inflation adjustment will be known in mid-October.
This year COLA increased Social Security benefits as well as Supplemental Security Income benefits by 8.7%, the largest increase since 1981 when the inflation adjustment was 11.2%. No one should count right now how much of an increase they might see in their Social Security benefits next year. Nevertheless, some observers expect a rise in the range of 2.7% to 3.2% remains a strong possibility.
The US Bureau of Labor Statistics will release inflation data for August at 8:30 am on September 13. The September figures will be released on October 12. Recently released data showed that the consumer price index in July rose 3.2% over the previous year.
To calculate the Social Security adjustment, inflation data based on the CPI-W for July, August, and September are added together and averaged. The Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, increased 2.6% over the past 12 months through July.
Retirees who are collecting Social Security and receiving a pension or using 401(k) savings are likely to complain more when it comes to their 2023 tax returns.
If you file as an individual, you may owe income tax on up to 50% of your Social Security benefits if your combined income is between $25,000 and $34,000.
If you file a joint return, you may owe income tax on up to 50% of your Social Security benefits if your combined income: is between $32,000 and $44,000.