Everything You Need To Know About Social Security’s Big Benefit Increase in 2023

Continuing inflation in the United States is reflected in the Social Security Administration’s announcement Thursday that the cost-of-living adjustment or COLA for 2019 Social Security payments will be 8.7 percent.

It’s a significant increase over this year’s not-unimpressive 5.9% COLA and the most significant increase since 1981 when it hit 11.2%. The annual adjustment has gone above 7% only five times since 1975 when it was first implemented.

According to Senior Citizens League policy analyst Mary Johnson, “a COLA of 8.7 percent is extremely rare and would be the highest ever received by most Social Security beneficiaries alive today.”

The Consumer Price Index tracks quarterly changes in the prices of goods and services over time, so any changes in that index will be reflected in the COLA. In July, the CPI fell to 8.5%, and in August, it fell even further to 8.3%. The US Department of Labor Statistics released the September Consumer Price Index (CPI) on Thursday, which came in at 8.2%.

Find out when you can expect your 2023 Social Security benefits increase to take effect and how to calculate your exact benefit amount by reading on.

What Is The Adjustment For Cost of Living (COLA)?

Using data from the Consumer Price Index for Urban Wage Earners and Clerical Workers, Social Security payments have been automatically increased or decreased annually for inflation since 1975.

The average CPI-W for the three months ending in the third quarter of the current year is compared to the same period one year prior by the Social Security Administration.

According to Rob Williams, managing director of financial planning at Charles Schwab, the COLA increase is a valuable feature that prevents retirees from being truly tied to a “fixed income” when managing expenses.

What Will The Increase In Social Security Benefits Be In 2023?

According to AARP, the average Social Security recipient can expect an increase of $146 per month or $1,827 per year, as a result of the 8.7 percent COLA that the Social Security Administration has established for 2023.

In June, the nonpartisan Committee for a Responsible Federal Budget predicted benefits would increase by as much as 10.8 percent which would amount to an average of nearly $180 more per year.

If inflation continued on its current trajectory the organization’s senior policy director Marc Goldwein said the following month, it would reach 11.4%, the highest increase ever recorded.

“Somewhere in the 9% range is probably a reasonable guess,” Richard Johnson, director of the retirement policy program at the Urban Institute told AARP that August. A 9% CPI increase would increase the average Social Security payment by $150 per month or $1,800 per year.

On Wednesday, White House press secretary Karine Jean-Pierre mentioned a monthly increase of $140 or about 8.5%, for the average senior citizen receiving benefits.

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When Will I Know What My Social Security Benefits Are For 2023?

In December, beneficiaries should receive letters with their 2019 benefit rates. The My Social Security website will still allow you to confirm your increase if you do not receive this letter.

When Will I Receive My Social Security Check Increase?

Checks issued in January 2023 will reflect the cost-of-living adjustment (COLA) that was implemented with December’s benefits.

Payments from Social Security are made weekly, on Wednesdays, according to a schedule that takes into account the beneficiary’s date of birth. That means that if your birthday falls between January 1 and December 10, your benefits will be dispersed on the second Wednesday of each month.

Your first cost-of-living adjustment will appear on your check dated January 18 if your birthday is between the 11th and 20th of the month.

If your birthday falls between January 21 and the end of the month then you will receive your benefits on the fourth Wednesday of the month which in 2023 is January 25.

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