Social Security retirees are going to be getting a raise in 2023. The amount they'll receive is going to be announced around October. But in recent months, estimates for how much older Americans will get have kept climbing. 

Here's why. 

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This is why estimates keep rising for your Social Security raise

Initially, experts such as the Senior Citizens League projected that retirees were on pace for an 8.6% cost of living adjustment next year. This seemed pretty generous, considering that seniors got a 5.9% benefits increase in 2022, and that was the largest raise in four decades.

Then, things changed. Newer estimates suggested the raise would be as big as 10.5%. And now the most recent estimates suggest 11.4%. That's a huge difference. With the typical retiree receiving about $1,669 per month on average, an 8.6% benefits increase would mean the average senior gets $140 more per month. But an 11.4% benefits increase would mean they get around $190 more per month.

The big question is why estimates keep rising. And the answer is simple: Inflation is surging. The COLA that seniors get isn't random; it's based on third-quarter data showing how the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) has changed year over year. That means the raise will be assessed by looking at CPI-W numbers for July, August, and September. 

Initially, projections for this data suggested that the CPI-W comparison for 2022 versus 2021 would show prices were up 8.6% year over year. But when costs kept climbing, experts had to revise upward to account for the new reality. If the trend continues and the CPI-W data shows that inflation really is at 11.4% on average during the three relevant months that count for the COLA calculation, that's how much extra money seniors will get next year.

On the other hand, if cost increases slow and prices begin to fall for things like gas, food, and housing, then the price index might not show such a dramatic change, and seniors won't end up getting those huge benefits increase after all.

Why retirees should hope for a smaller raise

So, does this mean that seniors should hope the CPI-W data for Q3 shows inflation of 11.4% or higher? Not necessarily.

If prices have gone up that much, seniors would get a big Social Security benefits increase. But of course everything they buy would be much more expensive. Their checks would only look bigger on paper. They wouldn't actually have any more buying power. 

Sadly, seniors would end up losing quite a bit of ground if they got a big raise, because most retirees also need to rely on savings. Chances are good that their investment account and savings account balances are not up 11.4% year over year. This means the buying power their invested funds provide will be reduced because their money isn't growing as fast as inflation, so some belt-tightening would be necessary. 

Retirees will find out their fate in October after the CPI-W data is released. The raise will then be set in stone even if inflation keeps going up after Q3. Seniors should hope now that estimates for their COLA don't go any higher because if trends continue, they're likely to find themselves forced to stretch their checks and savings next year to maintain the same living standard.