The cost-of-living rise for Social Security is 8.7%, which is the highest in four decades.
The greatest yearly rise since 1981, the Social Security Administration said on Thursday that payouts would increase 8.7% in 2023.
The difference in inflation between the third quarter of the previous year and the current year, in this case July-September 2021 versus July-September 2022, is what determines the cost of living adjustment, or COLA.
According to nonprofit organization AARP, the rise in 2023 will add an additional $145 to the typical monthly Social Security payout.
Read on: Increase in Social Security Benefits Sets 41-Year High. Everything You Need to Know Is Here
According to AARP CEO Jo Ann Jenkins, “Social Security is the largest source of retirement income for most Americans and provides nearly all income for one in four seniors.”
Jenkins continued, “High inflation continues to be an issue for older Americans, making the guaranteed payments given by Social Security, particularly the yearly COLA, more important than ever.
Benefits from Social Security have been automatically increased yearly since 1975 in accordance with rises in the cost of living. Years could pass before retirees saw an increase in their checks in the past because lawmakers would have to vote for increases.
When will my Social Security check reflect the 2023 COLA increase?
Benefits for December 2022 begin to include the 2023 COLA, which will be reflected in checks issued in January 2023.
Following a rollout schedule dependent on the beneficiary’s birth date, Social Security payments are made on Wednesdays. Therefore, if you were born between January 1 and January 10, 2023, your benefits will be paid on January 11, 2023, which is the second Wednesday of the month.
Your first COLA boost will appear on your Jan. 18 check if your birthday is between the 11th and 20th of the month. Your checks are paid on the third Wednesday of the month.
Benefits are paid out on the fourth Wednesday of the month, beginning with January 25 in 2023, for people born between the 21st and the end of the month.
When will I find out how much Social Security I’ll receive in 2023?
Beneficiaries should get letters describing their exact benefit rate for the upcoming year throughout the month of December. You can still check your raise online using the My Social Security website if you don’t receive this letter.
How does the COLA for this year compare to earlier increases?
The 2023 rise of 8.7% is the most since 1981, when it increased by 11.2%.
Only five occasions have annual automatic COLAs increased beyond 7% since they were originally implemented in 1975.
The year 1980 saw the largest increase—14.3%—as the US was through a severe recession at the time. In actuality, the late 1970s and early 1980s saw the greatest COLA rates.
Due to flatlining inflation during and after the Great Recession of 2008, there was no COLA in 2009, 2010 or 2015.
Do seniors have enough money after the COLA in 2023?
Even while the 8.7% raise represents a 41-year high, the inflation peak in June was 9.1%, and the COLA for 2022 was only 5.9%.
The nonprofit Senior Citizen League stated in a statement that “the 5.9% COLA got this year has fallen short on average by 50%.” “Social Security benefits purchase less over time without a COLA that effectively maintains pace with inflation, and that can generate hardships—especially as older Americans live longer in retirement.”
According to some experts, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is used to determine the yearly COLA, is not a reliable indicator of the financial needs of seniors.
The Consumer Price Index for the Elderly, which places more attention on the cost of food, housing, medical care, and other products and services that affect older Americans more, is linked to the COLA calculation in a bill supported by Connecticut Democratic Rep. John Larson.
In addition, Larson’s measure would eliminate the current five-month waiting period before receiving benefits, set a new minimum benefit of 25% over the poverty level, and award caregiver credits to adults who quit their jobs to take care of children or other dependents.