(CNN) — Social Security recipients could see a 10.5% increase in their payments in 2023, fueled by a sharp rise in inflation, according to one estimate.

How much would Social Security go up for 2023 because of the annual cost of living adjustment (COLA)?

That would add about $175 to retirees’ average monthly benefit, which is currently $1,668, according to The Senior Citizens League, an advocacy group that published the projection in July. But it might not be enough to cover the seniors expenses if the increase in prices in the coming months is not controlled.

The estimate is based on the June reading of a measure of inflation that the Social Security Administration uses to calculate the annual cost-of-living adjustment (COLA). It rose 9.8% in the last 12 months, compared to 9.1% annually for the broader and more well-known Consumer Price Index for All Urban Consumers.

When would the increase be announced?

The amount that retirees, people with disabilities and other beneficiaries will receive will not be determined until the fall. The official adjustment, which the agency publishes in October, is based on average inflation for the third quarter, as measured by the Consumer Price Index for Urban Wage and Employees, known as CPI-W.

If inflation registers increases in the three months from July to September, the 2023 adjustment could be 11.4%, according to The Senior Citizens League. If the rise in prices softens, the increase in the benefit could be 9.8%.

In May, The Senior Citizens League estimated that the adjustment would increase 8.6%, based on inflation at the time.

A separate estimate of the Committee for a Responsible Federal Budget, a watchdog group, found that if current inflation trends continue, the adjustment would be 11.4%. If inflation remains at June’s level, the increase would be 9%.

In any case, the adjustment will likely be the largest since the early 1980s, the last time seniors received a double-digit raise.

Bills outweigh benefits

Social Security beneficiaries received a 5.9% adjustment by 2022. But inflation outpaced it, leaving many seniors struggling to pay their bills, said Mary Johnson, a policy analyst for The Senior Citizens League.

“Inflation has been so high and so much higher than the 5.9% COLA that people received that they have experienced a shortfall in their benefits,” Johnson said. “If people don’t have adequate retirement savings or cash savings that they can easily access, people are turning more to consumer credit cards.”

Half of seniors said they had to spend their emergency savings in the past year, according to a survey The League conducted between January and March. This compares with 36% in a survey conducted last year.

Nearly half said they had gone to a food Bank or applied for food stamps, more than twice as many as in the 2021 survey. And more have applied for help with medical and drug costs, as well as with utility bills and rent.

Social Security benefits have lost 40% of their purchasing power since 2000 due to high inflation, according to a separate study by The League. The purchasing power of the benefit fell 10 percentage points between March 2021 and March of this year, the most since the study began in 2010. The loss is even greater now as inflation has continued to rise this year, Johnson said.

Medicare premiums may be lower

However, seniors should get some breathing room when it comes to their Medicare premiums. They had to face a 14.5% increase in Part B premiums for 2022which raised monthly payments for those in the lowest income bracket to $170.10, up from $148.50 last year. One of the main drivers of the increase was the expected increase in spending due to an expensive new drug for Alzheimer’s disease, Aduhelm.

Since then, however, the manufacturer of Aduhelm has lowered the price, and the Centers for Medicare & Medicaid Services have limited drug coverage. The agency said it will factor the under-spending into the 2023 premium.

The 2023 premium is expected to be lower than this year’s, although the final decision will be made in the fall.

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Other repercussions

Although many older Americans could use the extra money, a major adjustment could hurt low-income seniors. That’s because it could push them over income limits to qualify for government aid like food stamps, or require them to start paying taxes on benefits.

Thirty-nine per cent of seniors receiving assistance said their benefits were reduced due to the sharp 2022 adjustment, while 15% said they lost access to at least one program, according to a survey by The Senior Citizens League.

Also, some experts worry that a big adjustment could deplete Social Security’s trust fund more quickly.

In their annual report, the trustees of the program assumed inflation to be 4.5% in 2022 and 2.3% in 2023, though the actual numbers will likely be well above that, said Charles Blahous, senior research strategist. at George Mason University’s Mercatus Center and a former public trustee for Social Security and Medicare, at a recent Committee for a Responsible Federal Budget forum.

However, the Social Security trust fund is also expected to benefit from higher payroll tax revenue due to salary increases and from higher income tax revenues derived from higher benefits paid to beneficiaries.

Social Security will not be able to pay all benefits in 2035 if Congress fails to act, according to the trustees’ latest report.