Inflation is to blame for the largest increase in Social Security benefits in 40 years.
Prior to the announcement of Social Security payments for 2023, many analysts predict that they will grow by the most in four decades. The Social Security cost-of-living increase, or COLA, for this year was already a sizable 5.9%, or roughly $93 per month. However, the Consumer Price Index, which measures the change in prices Americans pay for goods and services over the last year, had already risen to 9.1% by June, according to the US Bureau of Labor Statistics.
This growth decreased to 8.5% in July and, according to CPI data released on September 15, was only 8.3% in August. This is fantastic news for the economy, but it still means that inflation has been much higher than the Federal Reserve's 2% target for the past 1.5 years. According to Mary Johnson, a policy analyst at the nonprofit Senior Citizens League, the benefits adjustment for 2023, which will be revealed sometime in October, "will be one of the biggest COLAs ever paid in the history of the program." How much could Social Security benefits increase in value in 2019? Find out by reading on.
What will the rise in Social Security benefits be in 2023?
Even though the Social Security Administration won't release the cost-of-living adjustment for 2023 until October, many analysts anticipate a rise that will be even higher than in 2022. The Committee for a Responsible Federal Budget, a nonpartisan organization, predicted in June that Social Security payouts will climb by up to 10.8% to reflect inflation, or over $180 more in monthly benefits. The organization's senior policy director, Marc Goldwein, tweeted the following month that if inflation continued on its then-current course, the increase would be 11.4% — even higher than the record 11.2% increase in 1981.
A 9% cost-of-living adjustment to Social Security in 2023 would add, on average, $150 to monthly checks or an additional $1,800 a year, according to Richard Johnson, head of the retirement policy program at the Urban Institute, who told AARP on August 10. Munnell added that it's "very likely" that benefits would rise even further. The Senior Citizens League predicted a COLA of 9.6% in 2023 last month. However, the organization has changed its forecast to a more conservative 8.7% now that August's inflation statistics are out.
The average monthly Social Security income is $1,657; if the 8.7% rise is accurate, that translates to an extra $144 per month. A bill before Congress may result in Social Security recipients receiving an extra $2,400 annually starting in 2023, independent of any COLA increases. The Social Security Expansion Act, introduced by Rep. Peter DeFazio and Sen. Bernie Sanders, would increase each monthly check for people presently receiving benefits or who will turn 62 next year by $200. The measure hasn't moved forward since it was introduced in June, however.
When will I find out how much Social Security I'll receive in 2023?
The Social Security Administration usually publishes the cost-of-living adjustment concerns shortly after — in some cases on the same day — the Bureau of Labor Statistics releases the inflation figures for September. Then, letters describing the precise benefit rate should be sent to the beneficiaries. You can still check your raise online using the My Social Security website if you don't receive this letter. The December benefits, which are reflected in checks issued in January 2023, are subject to the COLA.
When will my Social Security check start to increase?
In accordance with a rollout schedule depending on the beneficiary's birthdate, Social Security benefits are paid on the second Wednesday of each month if you were born between January 1 and October 10. Your first COLA boost will appear on your Jan. 18 check if your birthday is between the 11th and 20th of the month. Your checks are paid on the third Wednesday of the month. Benefits are paid out on the fourth Wednesday of the month, which is January 25 in 2023, for people born between the 21st and the end of the month.