In 2023, recipients of Social Security benefits, including Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) saw a record Cost of Living Adjustment (COLA) of 8.7%. This was the largest increase in the COLA since 1981, a significant increase in the amount of money they received. However, economists are forecasting a much more modest increase of 3.1% this year, as economic conditions begin to settle.
What is the COLA?
The Cost of Living Adjustment, also known as the COLA for short, is the amount by which Social Security benefits are increased every year in response to increases in the cost of living. As a general rule, the more that prices for things like food, rent, gas, and other necessities go up, the higher the COLA will increase. This is meant to help Social Security recipients keep up with increasing costs due to things like higher food prices or increases in utility bills.
How is the COLA Determined?
The COLA is measured based on something known as the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures the price of a collection of goods and services used by average workers. As the CPI-W increases, so does the COLA. However, this measurement has often come under criticism because it does not account for many sources of expenses that people may experience, such as the growing cost of healthcare.
Why is the COLA Decreasing By So Much This Year?
The Cost of Living Adjustment is expected to drop from 8.7% to what is estimated to be 3.1%, based on economic projections. This is due to a substantial reduction in inflation, which was one of the primary reasons for the COLA being so high this past year. With inflation coming under control, there is less reason for such a dramatic increase in Social Security benefits.
How Will This Affect SSDI/SSI Recipients?
This effectively means that people currently receiving SSDI or SSI benefits should not expect as large an increase in their benefits next year as they received this year. This may be disappointing, as many people receiving Social Security disability benefits are already struggling with their bills. However, it is also a sign that prices for basic goods like food and electricity will likely remain much more stable compared to the previous year.
If you or a loved one need assistance applying for SSDI or SSI benefits, it is important that you seek the guidance of an experienced Social Security Disability benefits lawyer. The lawyers at Sullivan & Kehoe, LLP have over 50 years of combined experience between its attorneys and are available to you or your loved one in obtaining Social Security Disability or Supplemental Security Income benefits. To schedule a consultation with our New York Social Security Disability benefits lawyers, call (631) 823-7155.
