The cost of living adjustment, also known as the COLA, was raised in 2022 to combat the escalating levels of inflation that were plaguing the economy at the time.
As a result, recipients of Social Security received the largest increase in their payments that they had received in nearly four decades.
There was a 5.9 per cent increase in payments made during January, which resulted in an increase of approximately $93 more per month for the typical recipient.
According to the Committee for a Responsible Federal Budget, a nonpartisan think tank, the increase for those nearly 70 million Americans who receive Social Security benefits will likely be even larger next year — between $130 and $180 more a month.
This information comes from projections made by the nonpartisan Trustees of the Social Security Trust Fund.
Due to the increase implemented this year, retirees now receive an average monthly benefit of $1,657.
However, the consumer price index had already increased by 9.1 per cent by June, which was a significant margin ahead of the adjustment of 5.9 per cent that Social Security accounted for.
Even if there was no change in inflation rates between now and 2023, the cost of living adjustment (COLA) would be 7.9 per cent, which is equivalent to about $130 extra each month.
Despite this, no one believes that it will continue to be the same: According to the estimates provided by the CRFB, the subsequent COLA will be 10.8 per cent if inflation continues to increase at the same rate as it has been.
That works out to an additional $178 in monthly benefits and a check for $1,838 for the typical Social Security recipient.
What kind of increases can we expect to see in our Social Security benefits in the following year?
Even though the Social Security Administration won’t reveal the cost of living adjustment for the following year until October, many industry professionals anticipate an increase that is even larger than the one that was implemented in 2022.
It is difficult to say exactly how much more: To account for the impact that inflation has on the cost of living, the CFRB has estimated that Social Security could increase this year’s benefit by as much as 10.8 per cent, which would be equivalent to nearly $180.
In May, the Senior Citizens League, an advocacy group that focuses on benefits, estimated that the adjustment for 2023 would be just 8.6 per cent, based on inflation then.
However, recent reports from the league indicate that if prices continue to rise over the next three months, the adjustment for 2023 might actually be as high as 11.4 per cent, which would be equivalent to almost $190 more being added to the monthly payment.
It forecasts that if prices are allowed to stabilize, the increase could be a more reasonable 9.8 per cent, which would be equivalent to an increase of approximately $160 per month.
When can I expect to receive information regarding the amount of my Social Security benefits for the year 2023?
Beneficiaries should expect to receive letters in December providing specific information regarding their benefit rate for the year 2023.
If you do not receive this letter, you will still be able to verify your increase through the My Social Security website.
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The cost-of-living adjustment becomes effective with the payment of benefits for December, which is reflected in the checks that are received in January 2023.
On Wednesdays, recipients of Social Security benefits receive their payments by a rollout schedule that is determined by their date of birth:
If you were born between the 1st and the 10th of the month, your benefits will be paid out on the second Wednesday of every month, and any increase will appear on your check dated January 11 if it was paid out on that date.
If your birthday falls between the 11th and 20th of the month, your checks are paid on the third Wednesday of each month, and you will see the first increase to your cost-of-living adjustment on the check that you receive on January 18.
