The Social Security Administration (SSA) has announced that the Cost of Living Adjustment (COLA) for Social Security benefits will be nearly 9% in 2023, the largest increase in Social Security benefits in 40 years. This even outpaces the 2022 COLA adjustment of 5.9%, which had been itself record-breaking at the time. Unfortunately, this adjustment is a reflection of rising prices that have made things more difficult for Social Security beneficiaries in the past year.
What is the Cost of Living Adjustment?
In simple terms, the Cost of Living Adjustment, also known as the COLA, is the amount that Social Security payments are automatically adjusted every year. This affects both payments for retirees that have applied for Social Security, as well as beneficiaries of Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI). The purpose of the COLA is to ensure Social Security payments remain at pace with increases in the cost of living, without needing to legislate increases every year.
What Determines the COLA for Social Security Benefits?
The COLA adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, also known as the CPI-W, which measures the cost of living for certain classes of average workers. It effectively measures the cost of a variety of goods and services that people must generally purchase to survive, and tracks changes in the income needed to afford those goods and services. As the CPI-W increases, the COLA increases to match it.
Why is the COLA Going Up So Much?
The primary reason for the massive increase in the COLA is due to a substantial increase in the cost of many basic goods and services. High inflation has played a substantial factor in this, increasing costs across the board and eating into many people’s paychecks. However, the cost of certain basic goods and services (such as fuel prices) have significantly outpaced inflation, driving up the COLA even higher.
How Could This Affect You?
If you are a recipient of Social Security benefits, including SSDI or SSI, you will likely see a major increase in those benefits in 2023, thanks to the COLA increase. This can help you to potentially cover more of your expenses. If you have not yet applied for Social Security benefits but have a disability that may qualify you for SSDI or SSI, you should consider speaking to a lawyer with experience handling Social Security disability claims. They can help you to make your application, and defend you in the event of a dispute.
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.