The American Institute for Economic Research, a private think tank, estimates Social Security checks will increase between 1.5% and 1.7% in 2013.
The Labor Department will release its September inflation reading on Oct. 16, which is the final of 12 readings used to calculate the cost of living adjustment made annually to benefits. The Social Security Administration will announce the 2013 benefit increase at that time. Benefits increased by 3.6% in 2012, when inflation was higher.
Steven Cunningham, director of research and education for AIER, said that the increase will not be enough to cover the actual rise in costs faced by many seniors, who receive the overwhelming majority of Social Security benefits.
Seniors don't typically have the same spending patterns as younger workers, whose purchases are more closely tracked by the government's inflation reading.
Cunningham pointed to larger increases in items more important to senior's spending, including food and beverages, which increased 2%; motor fuel, which rose 1.9%; and medical care, which jumped 4.1%. The AIER's estimate of the cost of every day items purchased by seniors showed a 2% increase over the last year.
"They're falling behind by about a half percentage point a year or so. It's not a huge amount, but over time that adds up," said Cunningham.
In 2009, benefits increased by 5.8% following a sharp rise in gas prices in 2008. But social security recipients saw no increase in 2010 and 2011, when spending dropped due to the recession and prices remained low.
This calculation doesn't only affect those receiving Social Security benefits. It is also used to raise the ceiling on wages subject to payroll taxes. This year's maximum is $110,100, but a 1.7% increase would subject an additional $1,872 to the 6.2% tax.
|Chrysler relents, agrees to recall 2.7 million Jeeps|
|Perils of moving to a no-tax state|
|Yahoo: 13,000 government requests for data|
|Stocks rally as Fed looms large|
|Why Apple's new MacBook Air is the ultimate road warrior's notebook|
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.98%||4.06%|
|15 yr fixed||3.09%||3.19%|
|30 yr refi||3.97%||4.05%|
|15 yr refi||3.08%||3.17%|
Today's featured rates:
|Latest Report||Next Update|
|Inflation (CPI)||June 18|
|Consumer confidence||June 25|
|Home prices||June 25|
|Manufacturing (ISM)||July 1|