How well do you remember 1981? Harrison Ford had his first bow as Indiana Jones in Raiders of the Lost Ark. Frogger and Donkey Kong were all the rage at video arcades. Bob Ross left the Air Force and took up painting. On top of that, we had the largest Social Security cost-of-living adjustment (COLA) on record: 11.2%.
This year’s COLA increase won’t reach that high, but the Senior Citizens League anticipated it to be as much as 8.7%. As it turns out, they were right on the nose. This tops last year’s 5.9% increase.1
It's been a challenging year with record high inflation. But now Social Security beneficiaries look to get this 8.7% increase added to their benefits in 2023, the highest increase in 40 years.
The Social Security Administration announced the change recently and it should result in a benefit increase of more than $140 per month on average starting in January.
What this increase means for those collecting Social Security benefits is additional help battling inflation. The average Social Security retiree benefit will increase $146 per month, to $1,827 in 2023, from $1,681 in 2022.1
Why is it happening now?
Congress has COLA increases pegged to rising inflation. While there’s been a great deal of talk about inflation this year, the increase depends on the much-anticipated official numbers: the third quarter’s Consumer Price Index (CPI) is measured against the CPI of the previous year, and the COLA is calculated from that.
While this increase has been widely anticipated, you may still have questions about this and other economic factors. I’m happy to discuss how this might affect your financial strategy.
John Piershale, CFP®, AEP®
1. CNBC.com, October 13, 2022
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