Social Security Administration he announced Its 66 million beneficiaries will see an 8.7% cost-of-living increase in 2023, the biggest annual increase since 1981, it said Thursday.
The increase means the average benefit check will increase by more than $140 to $1,827 a month, compared to a typical monthly payment of $1,681 in 2022.
The annual cost-of-living adjustment, or COLA, is based on the rate of inflation during the third quarter, or July through September — with the government releasing September inflation report earlier today. The question is whether the biggest boost in more than four decades can help shore up the reduced purchasing power of seniors, with the annual U.S. inflation rate far outpacing the 5.9% Social Security recipient COLA for 2022.
“This may be the first time, and possibly the last time, that recipients today will receive a COLA this high,” Mary Johnson, a Social Security and Medicare analyst at The Senior Citizens League, told CBS MoneyWatch in an email. “Since automatic inflation adjustments began, COLAs have only been higher three times (1979-1981).”
Social Security recipients saw a record COLA increase during this period due to the soaring inflation of the late 1970s and early 1980s. In 1981, seniors and other beneficiaries increased by 11.2%.
Since 2000, the annual increase in the cost of living has averaged 2.3%. However, in some years, recipients did not experience any impact. In 2009 and 2010, the COLA was 0% due to flat inflation in the years following the 2008 financial crisis.
In the 1970s, lawmakers established an automatic annual benefit increase for Social Security recipients that raises payments to keep up with inflation. Before that, Congress had to authorize increases to keep up with inflation, which meant sometimes for several years would pass before seniors received a cost-of-living adjustment.
— The Associated Press contributed to this report.