With just one month of consumer price data left before the Social Security Administration announces the 2023 cost of living adjustment (COLA), retirees are still on track to receive the biggest increase in more than 40 years.

Based on the new CPI-W data through August, released today by the Bureau of Labor Statistics, COLA for 2023 will be 8.7%, according to estimates from the Senior Citizens League, a nonpartisan seniors’ group.

The BLS data showed that the CPI index rose 0.1% for the month of August and 8.3% from a year ago.

The COLA estimate has fallen from a high of 10.5% in July. It was predicted at 9.6% last month. Still, the 8.7% is “extremely rare” and would be the highest received by most Social Security beneficiaries alive today, noted Mary Johnson, a Social Security policy analyst at the Senior Citizens League. Johnson pointed out that there were only three other times since 1975, the start of automatic adjustments, that the COLA was higher—9.9% in 1979, 14.3% in 1980 and 11.2% in 1981.

The Social Security Administration is expected to announce the 2023 COLA after the release of September consumer price index in October. 

Johnson said based on inflation through August, the calculation shows that the COLA for August 2023 has fallen short by 48%. A $1,656 benefit, she said, is short about $43.80 per month on average and by a total of $417.60 year to date.

“Without a COLA that adequately keeps pace with inflation, Social Security benefits purchase less and less over time, and that can create hardships especially as older Americans live longer lives in retirement,” she said.

Johnson noted that an early sampling from The Senior Citizens League’s 2022 Retirement Survey showed that  about 59% of participants believe they could be at risk of a higher tax liability for 2022 due to this year’s 5.9% COLA. In addition, she said 21% indicate that until his year, their household income was below the income thresholds that can make up to 85% of Social Security benefits subject to federal income taxes. They, too, worry they will pay tax on a portion of their Social Security benefits for the first time in the coming tax season, she said, adding that a COLA of 8.7% would present similar ongoing increased tax liabilities for next year.

The sample survey includes 626 participants, 96% of whom receive Social Security benefits.