Each fall, the Social Security Administration makes an announcement that has a huge impact on the 66 million people receiving benefits checks. The annual inflation adjustment is intended to prevent the elderly from losing purchasing power.
This year, the agency is expected to announce the 2023 Cost of Living Adjustment, or COLA, on Thursday morning, October 13. Social Security Administration the rules Its COLA report on inflation during the third quarter, or July-September – with the government also releasing its September inflation report on October 13.
Based on inflation data to date, seniors can have a COLA of 8.7%, according to the Association of Older People, an advocacy group for older Americans. That would translate to an average monthly increase of $144.10, boosting the typical interest from $1,658 to about $1,802 per month.
“This would reach the highest level of COLA since 1981,” said Mary Johnson, Social Security and Medicare policy analyst at the Senior Citizens League. “People will, in theory, see a nice rise in Social Security benefits this time around.”
After some seniorsThe 2023 increase may not cover the cost increase they saw in all of their outlays — the spiraling inflation that 2022 COLA failed to keep pace with. Seniors in 2022 received a cost of living adjustment of 5.9%, but inflation has risen above that every month this year, reaching 9.1% in June.
About Social Security isn’t just a program for older Americans. It also provides benefits to about 9 million disabled workers and their dependents, as well as 6 million widows, widowers and children, the latter of which is known as “heirs benefits”.
What is the cost of living adjustment?
In the 1970s, lawmakers instituted an automatic increase in annual benefits for Social Security recipients, boosting payments to keep up with inflation.
Before that, Congress had to authorize increases to keep up with inflation, which means sometimes several years may pass Before seniors receive an increase in benefits.
On what day will the 2023 COLA be announced?
Experts believe the Social Security Administration will announce the cost of living adjustment on October 13. That’s when the agency made its 2022 COLA announcement last year, and on the same day the government will release inflation data for September.
Does COLA accurately reflect inflation affecting the elderly?
Some advocates say it’s late, in part because the formula used by the Social Security Administration is based on an inflation measure called the Consumer Price Index for Urban Wage and Clerical Workers, or CPI-W.
Some seniors and their advocates have argued that CPI-W does not accurately reflect the price pressures facing older Americans.
CPI-W gives more weight to gasoline and transportation costs, which are expenses more common among commuting workers than retirees. It also puts less weight on medical costs, which are usually higher for older Americans.
How will this year’s COLA compare to previous years?
It will probably be the largest since 1981, when the US was experiencing another bout of high inflation.
That year, seniors got an 11.2% increase in benefits. There are only two more years when older adults received more COLAs than expected for 2023: 1980, when benefits rose 14.3%; and 1979 when interest rose 9.9%.
There were also several years in which recipients received no bump at all, such as in 2009 and 2010, when COLA was 0% due to flat inflation during the post-financial crisis years.
Will medical costs be eaten up in 2023 COLA?
There is some good news on this front.
And the health insurance plan for Older Americans, Medicare, said last month it wouldNext year, about 3% for Medicare Part B.
This is important because Medicare Part B plan, which covers routine doctor visits and other outpatient care, boosted its premiums in 2022 byan increase that has gutted many of the costs of adjusting to the cost of living that older adults received on their Social Security checks.
The typical Part B premium will decrease by $5.20 per month, reducing the standard monthly premium to $164.90. About 85% to 90% of Americans on state health insurance pay the standard rate, with the premium being deducted directly from their Social Security checks.
Another good news is the price cap on insulin for Medicare beneficiaries, which has been directed under the Inflation Reduction Act. Starting in 2023, Medicare seniors will pay no more than $35 a month for medication.
However, one of the most impactful provisions of the Inflation Reduction Act is for medical costs – a cap of $2,000 per yearIt won’t take effect until 2025, which means some seniors will still face higher drug costs and petty cash in 2023.
In what month will I get a COLA boost?
Although the Social Security Administration will announce the adjustment this week, seniors and others in the program will have to wait until January to receive their higher payments.
While COLA will actually go into effect with the December 2022 benefits, those payments will be made in January 2023.
Your check will be sent in January 2023 based on your date of birth:
- If your birthday falls on the 1st through 10th of the month, your payments will arrive on the second Wednesday of the month. This means that the first check with 2023 COLA will arrive on January 11th.
- If your birthday falls on the 11th to the 20th, your payments will come on the third Wednesday of every month. Your first 2023 COLA will arrive with the January 18th perk.
- If your birthday falls on the 21st to 31st, your payments will be scheduled on the fourth Wednesday of every month. Your first 2023 COLA will arrive with your January 25th check.