Earlier today, the Social Security Administration (SSA) announced an 8.7% Cost-of-Living Adjustment (COLA) for all Social Security and Supplemental Security Income (SSI) beneficiaries. Following last year’s historic COLA adjustment, the 8.7% increase for 2023 is the highest since 1981. This adjustment will give over 65 million Americans an increase in their December 2022 payment, which is payable in January 2023. An additional 7 million SSI benefit recipients will see their benefits increase beginning December 31, 2022. Anyone receiving benefits as a dependent on a Social Security beneficiary’s record will also see an increase in their benefit payment as well.
The importance of COLA increases
Each year, Social Security will implement an annual increase in benefits providing additional income to those who rely on the payments for their daily living and associated costs. These increases are vital to those relying on benefits. As additional expenses increase, such as Medicare premiums, a healthy Cost-of-Living adjustment provides beneficiaries with a cushion for further expenses.
The history of the Cost-of-Living Adjustment
COLA was not always an automatic annual increase for Social Security and Supplemental Security Income beneficiaries. Before 1972, COLAs were only implemented upon special legislation enacted by Congress. Then, in 1972, Social Security implemented the annual COLA allowances, providing beneficiaries with an annual increase tied to the Consumer Price Index (CPI-W) starting with 1975. For the first seven years, COLAs were payable for Social Security benefits paid in June and received in July. Starting in 1982 the Cost-of-Living Adjustment was moved to December to become payable in January.
What happens now?
All Social Security and Supplemental Security Income beneficiaries and their dependents will automatically receive the Cost-of-Living Adjustment in their December 2022 check. No action is required on the part of the recipient. Starting in December, beneficiaries will be able to verify their new benefit by logging into their my Social Security account. Any deductions, including Medicare premiums and voluntary tax, withholding will automatically adjust in accordance with their new benefit amount.
Nothing in this post is intended as advice or a suggestion to elect or not elect to claim benefits of any kind, including Social Security benefits, nor is it intended as financial advice in any way. The decision to claim benefits is a personal one that is contingent upon each individual’s unique circumstances. Nothing herein is considered medical advice, diagnosis, or treatment.