Social security cost of living raise 2022

The Social Security Administration announced the cost-of-living adjustment, or COLA, for 2023 benefits will be 8.7% -- the biggest boost since 1981, when it was 11.2%.

It's a significant increase from the 5.9% COLA set for 2022, reflecting ongoing inflation.

"A COLA of 8.7% is extremely rare and would be the highest ever received by most Social Security beneficiaries alive today," Senior Citizens League policy analyst Mary Johnson said in an earlier statement. In fact, the adjustment has gone above 7% only five times since 1975, when annual automatic COLAs were first introduced.

The 2023 COLA is tied to the Consumer Price Index, which charts year-to-year price fluctuations for goods and services, for the third quarter of 2022. The CPI dipped to 8.5% in July and was down to 8.3% in August. On Thursday, the US Department of Labor Statistics announced the CPI for September was 8.2%, 

Read on to learn more about how much Social Security recipients will see in the checks next year. For more on Social Security, learn when checks go out, how to access your payments online and how benefits are calculated.

How much will Social Security benefits increase in 2023?

The Social Security Administration has set the 2023 COLA at 8.7%, reflecting an additional $146 a month in the average check, according to AARP, or $1,827 more for the year.

Predictions fluctuated greatly in the past few months: In June, the nonpartisan Committee for a Responsible Federal Budget estimated benefits would increase as much as 10.8%, or almost $180 extra on average. 

The following month, Marc Goldwein, the organization's senior policy director, predicted that if inflation remained on its then-current trajectory, the increase would be 11.4%, the highest ever. 

But, by August, Richard Johnson, director of the retirement policy program at the Urban Institute, told AARP  that "somewhere in the 9% range is probably a reasonable guess." 

A 9% cost-of-living adjustment would add about $150 to the average Social Security check, or an additional $1,800 a year.

White House Press Secretary Karine Jean-Pierre cited a $140 a month increase on Wednesday, equal to about 8.5% for the average senior receiving benefits.

When will I know what my Social Security benefits are for 2023?

Beneficiaries should then receive letters detailing their specific benefit rate. If you miss this letter, you can still verify your increase online via the My Social Security website.

When will I see the increase in my Social Security checks?

The COLA goes into effect with December benefits, which appear in checks received in January 2023.

Social Security payments are made on Wednesdays, following a rollout schedule based on the beneficiary's birth date. So if you were born from the 1st through the 10th of the month, your benefits are paid on the second Wednesday of the month.

If your birthday falls between the 11th and 20th of the month, your checks are paid on the third Wednesday, and you'll see your first COLA increase on your Jan. 18 check.

Those born between the 21st and the end of the month receive benefits on the fourth Wednesday, which, in 2023, is Jan. 25.

President Biden may oversee the largest Social Security COLA since 1981.

With inflation hitting American wallets over the past year, the Social Security Administration's annual cost-of-living adjustment could be huge for 2023.

The September 2022 Consumer Price Index (CPI) report is set to be released on Thursday Oct. 13, and the Social Security COLA could be announced around that time.

When was the 2022 Social Security COLA announced?

Last year, the Social Security Administration released the 2022 Social Security COLA on the same day the September CPI results were announced. There is no guarantee that this will be the case this year.

Update: The Social Security Administration announced this morning that the Social Security COLA for 2023 will be 8.7%.

The 2023 Social Security COLA is almost unprecedented. This could be the last time retirees see a Social Security COLA this large. There have only three other times since the start of automatic inflation adjustments that COLAs were higher (1979-1981).

How is the Social Security COLA calculated each year?

The short version of this answer is that the annual Social Security COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Works (CPI-W) from the prior year's third quarter.

The 2023 COLA is based on the CPI-W from the third quarter of 2022. The cost-of-living increases are rounded to the nearest one-tenth of 1%. Looking back, the CPI for August was 8.3%, while the CPI for July was 9.1%.

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How big will the Social Security COLA be for 2023?

There is a variety of estimates floating around. Some experts say the 2023 Social Security COLA could be as high as 10%. Something more around 9% is probably more likely. Either way, this could be the largest Social Security COLA since 1981.

When you are retired on a fixed income, every penny counts. A large Social Security Cost of Living ... [+] Adjustment could help ease the pain from inflation on retirees budgets.

Does the Social Security COLA matter?

I hope your fun financial planner has done such an excellent job for you that you don't even notice the Social Security COLA each year. Sadly, this is not the case for many retirees. Around 12% of men and 15% of women rely on Social Security for more than 90% of their retirement incomes, according to the Social Security Administration.

For 2022, the average Social Security check averaged $1,669 per month. I know most of you would have trouble living off of this amount, which is below the average cost of rent in Los Angeles, not to mention necessities like eating and utilities.

When you are on a fixed income, every penny counts.

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Get Your Personalized Social Security Estimate

I would encourage you to take a moment and download your Social Security Estimate from ssa.gov. It will give you the estimated retirement benefits you can expect to receive based on your work history and the age at which you should choose to begin receiving benefits.

Knowing these numbers will help you understand what else you need to do to plan for a secure retirement.

Social Security is not meant to replace your entire income in retirement, and you will likely need to invest in IRAs, Roth IRAs, 401(k)s, or other workplace retirement accounts. On a brighter note, Social Security is a lifetime benefit that should pay out as long as you are alive.

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What will the COLA be for 2023 for Social Security?

Who gets a COLA check?