GREENSBORO, N.C. — When you hear the word COLA, you're probably thinking of a soda of sorts. But COLA is the cost-of-living-adjustment made by the government. Spoiler alert, the COLA could be going up and that could mean a raise for every Social Security beneficiary.
When the government reported that the annual inflation rate dipped from 9.1 to 8.5% in July, there was a sigh of relief. But many Americans, especially retirees living on fixed incomes, are still struggling with high prices. Here's why: The Social Security Administration calculates annual cost-of-living-adjustments or "COLA," by looking at the previous year's third-quarter inflation data and comparing it to the current year's third-quarter numbers, that's how they determine the increase for the following year.
The COLA calculated for 2022 was 5.9%, but with prices up 8.5% overall, you can see why so many are facing a shortfall.
"There may be a glimmer of hope. While we only have one month of data for the third quarter of this year, it's already showing a big increase from last year. When the Social Security Administration announces COLA for 2023 in mid-October, it could be over 9%, which would be the biggest increase since 1981," said Jill Schlessinger, CBS News Business Analyst.
The way it could shake out in real life looks like this: A 2022 monthly payment of $1,600 would change to$1,744.
If, as expected, the rate of inflation comes down throughout this year and next, then Social Security recipients would get to keep the higher COLA amount, and that should help them replenish their savings next year.
Correspondent: Jill Schlesinger/Producer: Chris Stein