It's hardly a secret that the cost of living has been soaring this year. Lately, consumers are paying a premium for everything from food to shelter to gas. And the problem could get even worse before it gets better.

In fact, the Federal Reserve is specifically moving forward with interest rate hikes in an effort to cool inflation. The logic is that if borrowing gets more expensive for consumers, they'll start to cut back on spending, which could cause the pace of inflation to slow.

But based on the inflation data we have so far, it's fair to assume that next year's Social Security cost-of-living adjustment (COLA) will be substantial. In 2022, seniors on Social Security saw their benefits increase 5.9%, and that was following a period when inflation wasn't nearly as high as it is today.

Social Security cards.

Image source: Getty Images.

In fact, the Senior Citizens League anticipates that next year's Social Security COLA could be as high as 10.5%. That's up from the 8.6% estimate the nonpartisan group was putting out earlier this year.

If Social Security benefits do increase by 10.5% next year, it will leave the average senior with an extra $175 a month to work with. But as helpful as a raise of that nature might be, it could also leave many seniors with continuous financial struggles.

Seniors can't bank on Social Security alone

Any time Social Security benefits increase in a notable way, it's only because inflation makes the case for a large COLA. And high levels of inflation mean that seniors are spending more money to cover their essential needs.

As such, generous COLAs really aren't something to celebrate because they don't give seniors a boost in buying power. At best, they help them maintain their buying power as living costs rise -- and often, they don't even do that.

That's why it's so important to not rely too heavily on Social Security in retirement and to have different income sources to access. For some, that might mean building a nice amount of savings. And doing so doesn't require workers to part with a ton of money.

Saving $400 a month in a retirement plan over 40 years will result in a nest egg worth over $1.2 million, assuming that plan's investments generate an average annual 8% return. But based on the stock market's historical performance, that's a reasonable return to factor in.

Of course, some people may be nearing retirement without much money in savings. Those in that boat can supplement their Social Security benefits in other ways -- such as by working part-time as their schedules and health allow for. These days, working as a retiree doesn't mean having to drag oneself out to an office or store, as there are a lot of jobs that can easily be done remotely.

While seniors may be in for a nice Social Security boost next year, for many, it won't actually improve their standard of living. Getting to that point requires income outside of Social Security, and the sooner that's recognized, the better.