Social Security Expectations for 2023

Inflation is at a 40-year high and interest rates keep increasing. However, there is a silver lining in these uncertain times, especially for Social Security Beneficiaries: the potential for a substantial cost of living adjustment in 2023.

As of now, projections for the adjustment are as high as 10%, but this may change based on the direction of inflation in the second half of 2022. Below are important factors Social Security beneficiaries should keep their eye on as we move towards 2023.

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Determining Cost of Living Adjustments (COLA)

While expectations for the COLA in 2023 are high, it is important to remember a couple of things about how the adjustment is calculated.  First, it is based on the 3rd Quarter inflation readings and not the worrisome readings we experienced over the first 6 months of the year.  Second, the inflation reading used to determine the COLA is the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is different than the more highly followed Consumer Price Index for all Urban Consumers (CPI-U) number published monthly.

According to the US Bureau of Labor Statistics “CPI-W is based on the expenditures of households included in the CPI-U definition that meet two requirements: more than one-half of the household’s income must come from clerical or wage occupations, and at least one of the household’s earners must have been employed for at least 37 weeks during the previous 12 months. The CPI-W population represents about 29 percent of the total U.S. population and is a subset of the CPI-U population.”

Will Medicare Affect COLA?

The actual dollar increase Social Security beneficiaries will experience in 2023 depends on the change in their Medicare Part B premiums, which are typically withheld from monthly Social Security checks.  For example, in 2022 while Social Security beneficiaries received a COLA of 5.9%, much of this was not seen by beneficiaries due to a 14.5% increase in Medicare Part B premiums.  With that said, an increase in Medicare B for 2023 is NOT likely.  In fact, it appears Medicare Part B premiums may be reduced based on an overestimation of costs associated with a controversial new Alzheimer’s drug (Aduhelm), as laid out in this press release. Still there are no guarantees.

As you begin planning for 2023 adjustments related to Social Security, be sure to a Certified Financial Planner as every situation is different.


Marshall Clay CFP, J.D., is a Partner and Senior Advisor at The Welch Group, LLC, specializing in providing Fee-Only investment management and financial advice to families throughout the United States. Marshall is a graduate of the United States Military Academy in West Point, New York, the Cumberland School of Law in Birmingham, Alabama, and is a CERTIFIED FINANCIAL PLANNER™.  In addition, Marshall is a frequent guest on local television stations as an expert on various financial planning matters.


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