It’s not exactly a bright spot, but it is a sign of the times.
It’s a near-certainty that Social Security beneficiaries will receive a record cost-of-living adjustment next year as inflation stubbornly remains at a 40-year high.
The Bureau of Labor Statistics reported Wednesday that the Consumer Price Index surged by 9.1% in June from a year before.
That’s well ahead of the 8.6% rate seen in May and surpassed the 8.8% rate expected by many economists.
The nonpartisan Senior Citizens League now estimates that Social Security recipients will receive a 10.5% cost-of-living adjustment for 2023.
That would translate to average monthly checks climbing by $175.10 to $1,668.
Just two months ago, the group was forecasting an 8.6% increase for next year.
Nothing is settled. The Social Security Administration tabulates annual cost-of-living adjustments based on third-quarter data, and we’re not there yet..
The next few months, in other words, will be pivotal.
And there’s another wild card: Medicare.
Medicare Part B premiums are typically deducted from Social Security checks. A significant increase in healthcare costs, in other words, could mitigate the cost-of-living bump.
And keep in mind that the bigger Social Security checks get, the faster the program’s trust funds will be depleted.
That doesn’t mean Social Security is going bankrupt, as some are fond of saying. But it does mean the program will have difficulty meeting its financial obligations.
Current estimates say the trust funds will run out of money in 2035, at which point Social Security would be able to meet only about 80% of current benefits.
In the past, such shortfalls were addressed by lawmakers through higher taxes and/or reduced benefits. That’s exactly how the program was designed — a work in perpetual progress.
In the current political climate? Well, it’s all too easy to imagine feckless lawmakers punting on hard decisions and creating a needless crisis.