SSA announces 2023 COLA: how much, when does Social Security rise take effect & benefits increase?
The Social Security Administration has announced a nearly 9% cost-of-living adjustment, affecting the benefits received by over 70m Americans.
The United States’ Social Security Administration (SSA) has announced an 8.7% cost-of-living adjustment (COLA) for 2023 - the largest increase in four decades.
Biggest rise since early 80s amid high inflation
The COLA affects the more than 70 million recipients of Social Security and Supplemental Security Income (SSI) benefits in the States, ensuring that their payments rise in line with inflation.
According to data published by the Bureau of Labor Statistics on Thursday, US inflation stands at an annual rate of 8.2%, amid levels not seen in the country since the late 1970s and early 1980s.
The 8.7% COLA announced by the SSA outstrips last year’s adjustment of 5.9%, and is the highest since 1981.
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How much will benefits rise by?
In a statement on Thursday, the SSA said: “On average, Social Security benefits will increase by more than $140 per month.”
To calculate how much your increased benefits will be, multiply the current amount you receive by 1.087.
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When will the COLA take effect?
The SSA says the 8.7% COLA will be applied to Social Security payments starting in January 2023, while increased SSI benefits will begin on 30 December 2022.
COLA notifications will be mailed out through December, with the SSA urging benefits recipients to wait until January before contacting the body if they have not received such a notice.
Most benefits recipients can also access their COLA notification online by logging into their ‘my Social Security’ account on the SSA website. (If you don’t have an account, check out how to create one.)
How is the COLA calculated?
The SSA calculates the annual cost-of-living adjustment based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Put together by the BLS, the CPI-W is a measure of how the cost of goods and services changes over time.
By comparing the CPI-W in the third quarters (July, August and September) of the current and previous year, the SSA determines how much benefits need to increase by in the coming 12 months to avoid falling behind the rate of inflation.
The COLA is the percentage by which the two CPI-W figures differ.
In 2022, the CPI-W for Q3 was 291.901, while in the same period in 2021 it was 268.421: a difference of 8.7%.