The biggest increase in Social Security benefits in four decades will deliver much-needed breathing room for millions of Social Security recipients.
The Social Security Administration, the federal government agency that oversees the benefits
, announced a 8.7% increase in the Social Security cost-of-living adjustment (COLA) for 2023.
The increase is the largest since 1981, when the COLA was 11.2%, and raises the average retiree benefit by more than $140 per month starting in January, according to the
Social Security Administration.
The adjustment — coupled with a decrease in Medicare Part B premiums next year — will make a critical difference in making ends meet for the more than 70 million retired senior citizens and disabled workers who have grappled this year with mounting prices for everything from electric and natural gas bills to groceries and monthly rent.
“Today's COLA announcement is excellent — and important — news for retirees,” Nancy Altman, president of
Social Security Works, told Yahoo Money. “The annual COLA is a key feature of Social Security, one that private-sector pension plans lack. It keeps benefits from eroding over time, which is especially vital for women, people of color, the LGBTQ+ community, and others who have been disadvantaged in the workplace and are, on average, more dependent on their earned benefits.”
The jaw-dropping bump-up was stoked by the soaring cost of groceries, gas and other goods and services since July. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 8.5% year over year in September, down from 8.7%% in August and 9.1% in July.
The COLA is calculated by averaging together the CPI-W consumer price index for the third quarter of the year – July, August, and September of 2022 – and then comparing that figure with the same data last year.
The once a year inflation adjustment began in 1975 under a formula made into law by Congress. And it goes a long way in helping beneficiaries stay abreast of increasing day-to-day living costs.
According to the findings in the Employee Benefit Research Institute (EBRI)’s
2022 Spending in Retirement Survey, retirees are spending much higher or a little higher than they can afford in 2022 (17% in 2020 vs 27% in 2022). The study conducted during the summer of 2022 of nearly 2,000 American retirees between the ages of 62 and 75. 7 in 10 say Social Security is a major source of their income.
‘The combination of a COLA this high, and the fact that Medicare Part B premiums went down is a once-in-a-lifetime event,” Mary Johnson, a Social Security policy analyst for
The Senior Citizens League, told Yahoo Money. “This is probably as good as it will get.”
Folks who receive Social Security benefits are typically notified by mail in early December about their new benefit amount. Most beneficiaries can also view their COLA notice online through their personal my Social Security account at
www.socialsecurity.gov/myaccount.
