Social Security 2023 COLA: How much payments will increase

Many Americans have felt the ache of their wallets this yr as costs have elevated for the whole lot from gasoline to groceries as a result of rising inflation. 

In current months, a number of VERIFY readers who obtain Social Security advantages have reached out to the crew asking in the event that they will see more cash of their checks subsequent yr. This comes after Social Security recipients noticed a 5.9% increase to their advantages, the biggest since 1982 (7.4%), for 2022 as a result of an annual cost-of-living adjustment (COLA) primarily based on inflation charges. 

Is Social Security’s cost-of-living adjustment (COLA) for 2023 one of many highest in historical past? 

Yes, Social Security’s cost-of-living adjustment (COLA) for 2023 is the best since 1981. 

Sign up for the VERIFY Fast Facts each day Newsletter

The Social Security Administration (SSA) adjusts profit quantities yearly to account for inflation by means of a cost-of-living adjustment (COLA). 

Social Security supplies individuals with an earnings after they retire or can’t work as a result of incapacity. Those who’re retired can sometimes begin receiving their Social Security advantages as early as age 62. 

On Thursday, Oct. 13, SSA introduced that Social Security recipients will obtain an 8.7 % increase of their advantages starting January 2023. This is the best COLA since 1981, when it was 11.2%, data on the SSA website show. 

More from VERIFY: Yes, Social Security’s cost-of-living adjustment for 2023 is anticipated to be greater than common

A price-of-living adjustment of 8.7% is uncommon, Mary Johnson, Social Security and Medicare coverage analyst for The Senior Citizens League, stated. Apart from 1981, there have been two different instances when the COLA was greater than it will be in 2023: 9.9% in 1979 and 14.3% in 1980. 

“This may be the first and possibly the last time that beneficiaries today receive a COLA this high,” Johnson stated of the 2023 COLA. 

COLAs for the SSI program, which supplies month-to-month payments to adults and kids with a incapacity who’ve restricted incomes and assets, are typically the identical as these for Social Security, although they normally take impact the month after Social Security profit will increase, SSA says on its website.  

How the annual COLA is calculated

The COLA is calculated based on the share increase within the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), an inflation gauge calculated by the U.S. Bureau of Labor Statistics (BLS). It measures the typical change over time within the costs that staff are paying for in a “basket of consumer goods and services.”

The SSA explains on its website that the COLA is the same as the share increase within the CPI-W from the third quarter common of the earlier yr to the identical common from the present yr. If there may be an increase, it’s rounded to the closest tenth of a p.c. That similar increase is utilized to month-to-month Social Security payments. 

In July 2022, the CPI-W elevated 9.1% yearly, data from the U.S. Bureau of Labor Statistics show. It dipped barely to eight.7% yearly in August 2022. Data for September present that the annual CPI-W price was 8.2 %.