Huge jump in Social Security payments expected today

WASHINGTON — The Social Security Administration is expected to announce its largest cost-of-living adjustment (COLA) in four decades today. The boost comes as stubbornly high inflation squeezes budgets around the country, often posing an extra burden for older Americans. 

The adjustments are based on the Consumer Price Index, a monthly government report that measures inflation by tracking how much Americans pay for food, gas and other costs.

The COLA for 2023 will be announced Thursday. Here’s what we know so far.

Estimates vary, but analysts have high expectations. The Senior Citizens League, a non-partisan advocacy group for seniors, estimates the Social Security benefits increase for next year may be 8.7%, based on the data released last month. In August, the group estimated it to be 9.6%, based on data at the time. 

If the current estimate holds, it would be the highest cost-of-living-adjustment since 1981 when it was 11.2%.

“A COLA of 8.7% is extremely rare and would be the highest ever received by most Social Security beneficiaries alive today,” the group said in a press release last month. For context, the adjustment has averaged 2.3% since 2000 due to tame inflation. 

The exact amount beneficiaries will get varies. The group said for the average benefit of $1,656, an 8.7% COLA would add $144.10 for a total of around $1,800. 

That’s roughly in line with a statement White House Press Secretary Karine Jean-Pierre made Wednesday: “Tomorrow, seniors and other Americans on Social Security are will learn precisely how much their monthly checks will increase – but experts forecast it will be $140 per month, on average, starting in January.”

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The next Consumer Price Index will be released today at 8:30 a.m. Eastern. Based on last year’s announcement, the Social Security Administration will release the COLA for 2023 at about the same time. 

The increase will put more cash in the hands of people who need it — and they’re likely to use it, feeding more fuel into the economy.

But it also means the Social Security system is paying out more, which can add more strain on its trust fund.

One year of big increases driven by inflation won’t drain the system by itself, but it’s already long been heading toward an unsustainable future. The latest annual trustees report for Social Security said its trust funds that pay out retirement and survivors and disability benefits will be able to pay scheduled benefits on a timely basis until 2035. After that, incoming cash from taxes will be enough to pay 80% of scheduled benefits.

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