The Consumer Price Index for Wage Earners & Clerical Workers (CPI-W) for August was released earlier this week. While inflation did slow compared to the earlier parts of the year, it hasn’t subsided by any means. In fact, the Federal Reserve is probably going to give interest rates a rather large hike to combat this persistent trend.
Raise for seniors
Based on the CPI-W change from the 3rd quarter of the previous year, the Cost of Living Adjustment (COLA) for Social Security is determined. According to most sources, the best estimate is now an 8.7% increase, which will be effective on January 1st. The official numbers won’t be announced until mid-October, but nonetheless, experts don’t expect the numbers to change drastically over the next month.
Who else is impacted
The COLA impacts various groups, including military retirees and those receiving veterans benefits. Federal retirees get either a COLA or a diet-COLA, depending on which retirement system they fall under. A diet-COLA is just like it sounds: a reduced version of the full COLA. Make sure you know which system you fall under and how it impacts your benefits.
What to do now
In short: NOTHING! Don’t change your spending habits based on a prospective pay raise. Hang on, see how the inflation numbers shake out over the next month or so, and then start budgeting. It’s likely you’ll need the increased amount as virtually all costs are increasing globally.
If you’re getting kind of antsy in the meantime, check out our YouTube page. This will give you plenty to think about for 2023!