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October 18, 2022 at 12:08 PM
Related: 12 States Where $500K Will Last Longest in Retirement
Social Security Administration officials announced Thursday that the cost-of-living adjustment, or COLA, for Social Security benefits will be 8.7% in 2023.
Advisors were quick to point out that each client’s own personal inflation rate depends on factors such as what the client buys, how often the client buys those items, and where the client lives.
Any given basket of goods and services will probably cost more in the New York area than in St. Louis.
We took a look at how average Social Security benefits purchasing power might change in major U.S. metropolitan areas in 2023, after taking both the COLA and local inflation rates into account.
What It Means
How much more, or less, purchasing power older clients really have in 2023 will vary from place to place.
The variations could affect the accuracy of any life, annuity, retirement savings or general financial calculations that include inflation.
The Details
The Social Security COLA is based on the U.S. Bureau of Labor Statistics’ Consumer Price Index for All Urban Consumers.
The BLS team publishes separate CPI-U figures for 23 urban areas. Because of resource constraints, some of those urban areas have different inflation rate publication schedules than others.
To create this ranking, we used the latest year-over-year price index change figures for each community included. The figures for 12 of the communities were from September, and the figures for nine of the communities were from August.
Overall, the Social Security COLA is 0.5 percentage points higher than the 8.2% year-over-year inflation rate reported for all U.S. urban areas for September.
For individual communities, the net change in Social Security benefits purchasing power, based on the latest available CPI-U figures, will range from a decrease of 4.3% to an increase of 3%. See the gallery for the 12 metro areas where the 2023 COLA will benefit retirees the most.
(Image: pixfly/Shutterstock)
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