Social Security COLA 2023: How much will benefits increase next year?
The SSA has announced an 8.7 percent COLA that will be applied to social security benefits starting in January 2023.
Consumers are paying 8.2 percent more on food, energy, and shelter than they were a year ago, and for those on a fixed income, like Social Security, keeping one’s head above water has become increasingly difficult.
To help seniors and other beneficiaries keep up with inflation, the Social Secuirty Administration offers a yearly Cost-of-living adjustment (COLA) which this year will hit 8.7 percent.
This is one of the largest on record and will bump the average benefit from $1,666.49 to $1,808,14.
The SSA has said that the bonus in benefits will bump up the average payment by around $140.
When will beneficiaries be informed of their new benefit amount?
In December, the Social Security Administration will send out letters to beneficiaries to inform them of how their benefits will change in the coming year.
Later this year, the federal government will also inform Medicare members how their monthly premiums will change in 2023. Typically, premiums for Medicare Plan A and B see increases, but last years was unprecedented. The massive increase occurred after the government decided that an expensive Alzheimer’s medication would be covered under the plan. However, later in the year, new research indicated that the medication was not effective, so premiums decreased when coverage for the medication was stripped from the state-sponsored insurance plans.
Will the COLA impact other benefits?
Yes. The COLA also applies to Supplemental Security Income (SSI) as well as Social Security Disability Insurance (SSDI). All those who receive these benefits will see the COLA applied to their checks starting in January 2023.
These important programs differ slightly in their mission.
SSI is not means tested, meaning that the benefit amounts are the same because one does not pay into the pot from which payments are distributed. These benefits are sent to those with disabilities that are unable to work because of their condition and also cover children whose parents may need to pay for additional care for them. The chart below shows how the COLA will impact the average benefit amount by age group.
SSDI or disability insurance delivers payments to those who become disabled and are then unable to work. Each month, millions of workers pay taxes to the SSA, and part of those funds go towards this program. In 2022, the average payment was $1,232.11 and will go up to $1,339.18 once the COLA is applied in 2023.