Social Security benefits are recalibrated each year with a cost-of-living adjustment, or COLA, intended to account for inflation. The increase is based on the Consumer Price Index, or the year-over-year change in prices Americans pay for goods and services.
While inflation in 2021 increased Social Security benefits by 5.9% this year, the bump for 2023 is expected to be significantly higher. Inflation has cooled over the past few months, but financial analysts are still predicting a Social Security increase of at least 8.7% -- the highest since 1981, when the COLA was 11.2%.
When will we find out the COLA for Social Security benefits in 2023? Read on.
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When will the Social Security Administration announce the COLA increase for 2023?
The 2023 COLA is determined by data reported in the Consumer Price Index for July, August and September 2022.
The US Bureau of Labor Statistics typically releases CPI information in the second week of each month: On Sept. 13, for example, the agency reported inflation information for August, which was at 8.3%, a slight decline from July's 8.9%. The CPI for September will be announced on Oct. 13.
Last year, the 2022 COLA increase on the same day the CPI was announced. If that holds true his year, we should know how much next year's Social Security benefits will increase on Oct. 13.
How much could Social Security benefits increase in 2023?
With the CPI for August now available, the nonprofit Senior Citizens League has predicted a COLA increase of 8.7%. That's more modest than its claim of 10% earlier in the year but would still work out to an additional $144 a month on average for recipients.
That's among the more conservative estimates, though. In an Aug. 30 Marketwatch column, Alicia Munnell, director of Boston College's Center for Retirement Research, predicted the boost would be 8.9% on the lowest end and 9.5% on the upper end.
That same month, 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% bump would add about $150 on average to checks every month.
When will I see the increase in my Social Security check?
The annual increase goes into effect with December benefits, which appear in checks dated January 2023.
Social Security payments follow a rollout schedule based on the beneficiary's birth date: If you were born from the first day through the 10th day of the month, your benefits are paid on the second Wednesday of the month.
If your birthday falls between the 11th and 20th, your check is paid on the third Wednesday, so you'll see your first COLA increase on Jan. 18, 2023.
Retirees born between the 21st and the last day of the month receive benefits on the fourth Wednesday. In that instance, your first increase would appear on Jan. 25, 2023.
Beneficiaries should then receive letters detailing their specific benefit rate in December. You can also check your rate on the My Social Security website.