Analysts believe the cost-of-living adjustment to Social Security checks will be the biggest since 1981.
Social Security's annual cost-of-living adjustment was a substantial 5.9% in 2022 -- equal to an additional $93 a month on average.
By June, though, the Consumer Price Index had risen to 9.1%. The CPI charts year-over-year price changes for goods and services and determines the annual adjustment to Social Security benefits. It dipped to 8.5% in July -- and was 8.3% in August -- but it's still outpacing the Federal Reserve's target of 2% by a huge margin.
The 2023 cost-of-living-increase, or COLA, will be announced in October and experts believe Social Security checks could go up at least 8.7% next year, the biggest increase in more than 40 years.
"A COLA of 8.7% is extremely rare and would be the highest ever received by most Social Security beneficiaries alive today," Mary Johnson, policy analyst for the nonprofit Senior Citizens League, said in a statement. In fact, the COLA has only surpassed 7% five times since 1975.
How much more could seniors see in the Social Security checks next year? When will the new benefit rates be announced? Read on to find out.
How much will Social Security benefits increase in 2023?
The Social Security Administration will disclose the 2023 cost-of-living adjustment in mid-October. Predictions have fluctuated greatly: In June, the nonpartisan Committee for a Responsible Federal Budget estimated benefits would increase as much as 10.8% to account for inflation, or almost $180 extra in monthly benefits on average.
The following month, Marc Goldwein, the organization's senior policy director, tweeted that if inflation remained on its then-current trajectory, the increase would be 11.4%, the highest ever.
Richard Johnson, director of the retirement policy program at the Urban Institute, told AARP on Aug. 10 that "somewhere in the 9% range is probably a reasonable guess."
A 9% cost-of-living adjustment would add about $150 to most Social Security checks, or an additional $1,800 a year on average.
Last month, the Senior Citizens League foresaw a 9.6% COLA in 2023. With August's inflation data in, the organization has revised its prediction to a more conservative 8.7%. The average Social Security check is $1,657 -- if the 8.7% bump is correct, that would work out to an increase of about $144 a month, or about $1,730 for the year.
Separate from any COLA increase, a bill before Congress could see Social Security recipients getting an additional $2,400 a year in 2023. Introduced by Rep. Peter DeFazio and Sen. Bernie Sanders, the Social Security Expansion Act would add $200 to each monthly check for anyone currently receiving benefits or who will turn 62 next year. The measure, however, hasn't moved forward since it was introduced in June.
Another proposal from Rep. John Larson, Democrat of Connecticut, would change how the COLA is calculated, putting greater emphasis on the cost of goods and services that impact seniors, like food, housing, apparel and medical care.
Larson's bill would also set a new minimum benefit of 25% above the poverty line, eliminate the current five-month waiting period to receive payments and provide caregiver credits to people who leave the workforce to care for children or other dependents.
When will I know what my Social Security benefits are for 2023?
The Bureau of Labor Statistics is scheduled to announce inflation data for September on Oct. 13, and the Social Security Administration typically announces the cost-of-living adjustment issues soon after -- in some cases on the same day.
Beneficiaries should then receive letters detailing their specific benefit rate. If you miss this letter, you can still verify your increase online via the My Social Security website. The COLA goes into effect with December benefits, which appear in checks received in January 2023.
When will I see the increase in my Social Security checks?
Social Security payments are made on Wednesdays, following a rollout schedule based on the beneficiary's birth date.
If you were born from the 1st through the 10th of the month, your benefits are paid on the second Wednesday of the month.
If your birthday falls between the 11th and 20th of the month, your checks are paid on the third Wednesday, and you'll see your first COLA increase on your Jan. 18 check.
Those born between the 21st and the end of the month receive benefits on the fourth Wednesday, which, in 2023, is Jan. 25.