Social Security recipients will likely get their highest cost-of-living adjustment increase in four decades next year, as estimates for the 2023 COLA are in a range of 8.5% to 9.0%. If that happens, it would be the biggest hike since 1981, when the COLA was 11.2%.
The reason next year’s COLA projection is so high is because the 2022 inflation rate is also the highest in more than 40 years, meaning Social Security recipients need bigger checks to keep pace with rising prices. The Social Security Administration has implemented annual cost-of-living adjustments since 1975.
In the past 21 years alone, those adjustments have boosted the average monthly Social Security payment from $874 in 2001 to $1,657 in 2022, according to a report from Better Benefits, which provides information on Social Security, Medicare, aging and retirement benefits.
As Better Benefits noted, the Consumer Price Index for all Urban Consumers is used to determine the annual Social Security COLA. Since 2021, that metric has risen by an average of 2.19% a year. Over the same time period, Social Security payments have risen by an average of 3.08% a year. Based on that growth rate, the average monthly check could be $2,112 by 2030.
Here’s a rundown of how average monthly Social Security payments could look for the rest of the decade:
Keep in mind that those projections are based on the average Social Security payment increase over the last couple of decades, which means some years the increase will be above the average and some years it will be below the average. For example, next year’s COLA could be nearly three times higher than the average, meaning the average payment in 2023 will be closer to $1,800 than $1,700.
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This article originally appeared on GOBankingRates.com: Social Security Payments Could Reach $2,112 by 2030