The Social Security Administration announced Thursday that its 66 million beneficiaries would receive aFor 2023, the largest annual increase since 1981.
The increase means that the average benefit check will increase from $140 to $1,827 per month, compared to the typical monthly payment of $1,681 in 2022.
The annual cost-of-living adjustment, or COLA, is based on the rate of inflation during the third quarter—or July through September—with the government releasing it.earlier today. The question is whether the biggest boost in more than four decades can help offset the declining purchasing power of senior citizens, with the annual rate of inflation in the U.S. far higher than the 5.9% COLA Social Security recipients achieved for 2022.
“This may be the first, and possibly the last, time that beneficiaries receive a COLA today,” said Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League, in an email to CBS Moneywatch. “COLAs were only three times higher (1979–1981) since the introduction of automatic inflation adjustment.”
Social Security recipients saw record COLA increases during that period due to rising inflation in the late 1970s and early 1980s. In 1981, seniors and other beneficiaries received an increase of 11.2%.
Since 2000, annual cost-of-life growth has averaged 2.3%. In some years, however, the beneficiaries did not get any bump. In 2009 and 2010, the COLA was 0% due to a drop in inflation in the years following the 2008 financial crisis.
In the 1970s, lawmakers implemented an automatic annual increase in benefits for Social Security beneficiaries that boosted payments to keep up with inflation. Previously, Congress had to authorize increases to keep up with inflation, which meant that sometimes years passed before seniors could receive an adjustment to the cost of living.
-The Associated Press contributed to this report.