2023 COLA: Not All It’s Cracked Up to Be? - Motley Fool
If you watch the news headlines at all, you’ve no doubt heard that the Cost of Living Adjustment (COLA) for 2023 will be historically high – great news, of course, for seniors on Social Security who are struggling to make ends meet. Inflation over the past two years has resulted in nearly all consumer goods costing significantly more, taking a particularly painful bite from seniors on a limited income. The official 2023 COLA increase will be announced tomorrow (October 13) and most pundits today are predicting it will be about 8.7%. So how can we not rejoice about getting such a big raise?
Well, let’s look under the covers with this Motley Fool article by Sean Williams, who reminds us that “the only reason next year’s COLA is so robust is because the U.S. inflation rate hit a four-decade high in June. In other words, a significant portion of next year’s monthly benefit increase is likely to be eaten up by the rising cost of food, shelter, energy, and other expenses.”
Further, we’ve already been paying those highly inflated consumer prices for some time now, and won’t see the COLA increase until next year. So we’re already financially behind even before the COLA is applied, with one senior group finding that the buying power of Social Security income has declined by about 40% since 2000. Thus the forthcoming historic COLA increase is a bitter-sweet event, certain to help seniors make ends meet a little now, but woefully insufficient to offset the soaring inflation which has severely drained our pockets for nearly two years and continues to erode our buying power. Click here to read Sean Williams’ Motley Fool article.