The Social Security Administration announced Thursday that its 66 million beneficiaries will receive an 8.7% cost-of-living increase for 2023, the largest annual boost since 1981.
The increase means the average benefit check will rise more than $140 to $1,827 a month, compared with the typical monthly payment of $1,681 in 2022.
The annual cost-of-living adjustment, or COLA, is based on the inflation rate during the third quarter, or July through September — with the government releasing itsearlier today. The question is whether the biggest boost in more than four decades can help shore up seniors’ diminished purchasing power, with the annual rate of inflation in the U.S. far outpacing the 5.9% COLA Social Security recipients got for 2022.
“This may be the first, and possibly the last, time that beneficiaries today receive a COLA this high,” said Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League, in an email to CBS MoneyWatch. “There were only three other times since the start of automatic inflation adjustments that COLAs were higher (1979-1981).”
Social Security recipients saw record COLA hikes during that period because of searing inflation in the late 1970s and early 1980s. In 1981, seniors and other beneficiaries received an 11.2% hike.
Since 2000, the annual cost-of-living increase has averaged 2.3%. In some years, however, beneficiaries received no bump. In 2009 and 2010, the COLA was 0% due to flatlining inflation in the years that followed the 2008 financial crisis.
In the 1970s, lawmakers implemented an automatic annual increase in benefits for Social Security beneficiaries that boosts payments to keep up with inflation. Prior to that, Congress had to authorize increases to keep up with inflation, which meant that sometimes several years would pass before seniors received a cost-of-living adjustment.
—The Associated Press contributed to this report.