The Consumer Price Index used for the calculation of the annual Social Security benefit cost-of-living adjustment, the CPI-W, rose 9.1 percent over the prior July period according to the Bureau of Labor Statistics.
Calculated against the third quarter CPI average for last year of 268.421, the Social Security COLA for 2023 would be 8.86 percent.
It’s important to note that July is only the first of the three months that are used, every year, to calculate the annual Social Security cost of living adjustment. So, we’re now “in the money,” using the first index number that will used in the actual COLA calculation. But two additional months will be needed to calculate the final COLA
Speculating on the next two months
If the index remained unchanged in both August and September, the annual Social Security adjustment for 2023 would be 8.86 percent (292.219/268.421).
If the index figures for August and September are higher or lower, the final COLA figure will be higher or lower. Here’s an example. For the COLA to be 10 percent– which some observers have thought possible– the index average for the quarter would have to be 295.263. That’s possible, but not likely.
Evidence-Based Guessing Next Year’s Social Security COLA |
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| This table shows the month by month progression of experienced inflation from the measuring period in 2021 to the most recent CPI figure for July. You can continue the calculation by adding the CPI-W as it is released around the 10th of each month and dividing by the average index figure for last year, 268.421. The press release is available at: https://www.bls.gov/news.release/cpi.nr0.htm | ||
| Period | CPI-W Index | Inflation to Date, in % |
| Third Quarter, 2021 | 268.421 | 0.00 |
| October | 271.552 | 1.17% |
| November | 273.042 | 1.72 |
| December | 273.925 | 2.05 |
| January 2022 | 276.296 | 2.93 |
| February | 278.943 | 3.92 |
| March | 283.176 | 5.50 |
| April | 284.575 | 6.02 |
| May | 288.02 | 7.30 |
| June | 292.542 | 9.00 |
| July | 292.219 | 8.86 |
| August | ||
| September | ||
| Third Quarter 22’ average | ||
| Calculated SS Cola | Q32022/Q32021=? | |
| Sources: Social Security website and Bureau of Labor Statistics website | ||
This information is distributed for education purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, or service.
Photo:
(c) Scott Burns, 2022
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