Who is eligible to get a Social Security COLA increase?
With inflation eating away at household finances, the announcement of the Social Security cost-of-living adjustment is eagerly awaited. Who will benefit?
Inflation in the United States has been rising at its fastest clip in four decades putting pressure on American household finances. For those that live on a fixed income, such as Social Security beneficiaries, this is especially true.
Millions who receive Social Security benefits are eagerly awaiting the cost-of-living adjustment (COLA) to help ease the pain of rising prices. Recipients of old-age retirement, survivors, and disability benefits will all see a boost to their monthly payments when the 2023 COLA takes effect.
But they aren’t they only ones who will see their benefits increase. Supplemental Security Income recipients will see their benefits go up as well. And since December 2021, veterans benefits have been tied to the Social Security COLA increase.
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How much will the Social Security COLA increase in 2023?
Last year, the Social Security Administration announced the largest COLA increase in forty years. Around 70 million Americans saw their benefits jump by 5.9 percent at the beginning of 2022. This represented a boost of $93 for the average recipient.
Sky-high inflation recorded in the second half of 2021 was behind the large increase in benefits. However, prices have continued to rise at a breakneck speed throughout 2022 so far, prompting experts to predict an even bigger boost to benefits in 2023.
While inflation has tapered some in July, if inflation were to continue at a similar pace to that experienced through June, the 2023 COLA could be around 9.6 percent. According to estimates from the Senior Citizens League reported by the Detroit Free Press, even higher, over 10 percent, should prices jump again.
However, predicting the exact amount of what the COLA will be though is difficult due to how it is calculated.
How is the COLA increase calculated?
The cost-of-living-adjustment, or COLA is a percent increase applied to Social Security benefits each year based on price increases in the market. The COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The Consumer Price Index, which measures inflation across a wide variety of goods and services, is used to calculate the COLA.
When making the calculation, the Social Security Administration only uses the third quarter (July, August, and September) of each year. The agency rounds to the nearest tenth of a percent.
When will the 2023 COLA be announced?
The COLA is typically announced in mid-October between the 13th to 15th.
When will the 2023 COLA be applied to payments?
The 2023 COLA will be applied to payments made for January 2023, and each of the eleven remaining payments for that year. However, the first monthly checks that will reflect the increase will come on 30 December 2022 for those who receive Supplement Security Income benefits, since these are scheduled to go out the first of every month unless that day falls on a weekend or a holiday.