The Cost of Living Adjustment (COLA) for Social Security beneficiaries in the United States will rise 8.7% in 2023 to an average of $1,827 a month, according to the Social Security Administration (SSA) and additional reporting by the Associated Press (AP).
The increase marks the highest figure the COLA has seen since 1981, fueled by historic levels of inflation that has the ability to significantly impact the finances of older people living on fixed incomes. On average, the new COLA will mark a $140 increase per month in Social Security benefit payments that likely marks welcome news for those living off of the program’s benefits.
However, some seniors report that while the increase is a positive sign, the likelihood of even this historic increase making a significant dent in the broader cost increases that have accompanied current levels of inflation appears minimal. One senior who spoke with the AP about the increase did not think that the COLA increase will make much of a difference in covering necessary costs such as home maintenance or grocery bills, for instance.
“Food is ridiculous. I come out with a bag full of groceries — $50 — don’t have about 10 items,” said 85-year-old Chicago resident Shirley Parker to the AP.
The causes of inflation are varied, and no nation has been spared. In addition to inflation racking global economies, supply chain difficulties and energy prices have been exacerbated by the Russian invasion of Ukraine as well as the ongoing nature of the COVID-19 coronavirus pandemic. These factors in totality have continued to create economic stresses for people all over the world.
Energy prices are likely to inch up further due to the recent decision by the Organization of the Petroleum Exporting Countries (OPEC) cartel to reduce oil production by 2 million barrels per day, a decision the United States has criticized and which has led President Biden to say the relationship with the cartel’s de facto leader, Saudi Arabia, will be “reevaluated.”
On the heels of the news related to the COLA increase, a new report from the federal government revealed that the Consumer Price Index (CPI) rose 0.4% in September, indicating that inflation is accelerating. The rise is higher than the 0.1% addition the CPI saw in August, and inflation generally is up 8.2% in the past 12 months.
The reaction of the reverse mortgage industry to higher levels of inflation has varied, with one reverse mortgage industry veteran feeling that the business has a chance to thrive by offering senior borrowers an option to stabilize their finances while others have offered more general caution.
“Our clients should be sensitive to inflation,” said Norcom Mortgage’s John Luddy recently to RMD. “I think that my colleagues in the business have to think about that, and how to reach lead sources that someone might come [to if they are] being pressured by inflation.”
Read a fact sheet released by SSA related to the rise of the COLA and the reporting at the AP.
