The Social Security cost of living adjustment (COLA) for 2023 is set to be the largest jump in benefits in 40 years, thanks to high inflation rates.
The roughly 70 million people getting Social Security benefits could receive an 8.6% COLA next year, according to an estimate from Mary Johnson, a policy analyst from The Senior Citizens League, an advocacy group.
That would mean that the average retiree who gets a monthly check of $1,657 this year, would get an additional $142.50 a month in 2023, increasing that payment to $1,800.
The yearly COLA in monthly payments to people receiving Social Security benefits is based on the July, August and September Consumer Price Index for Urban Wage Earners and Clerical Workers.
The July CPI for Urban Wage Earners number released Wednesday was 8.5%. In June, the number was 9.1%.
The increase in payments, set by the Social Security Administration and announced in the second week of October, depends on several factors that measure the cost of food, shelter and other items such as transportation, clothing and medical care.
The Social Security Act provides a formula used to calculate each year’s COLA, which is based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
The CPI-W has eight major spending categories used in the formula to determine the next year’s COLA.
Social Security benefits rose 5.9% this year.
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