Starting this Friday, December 30, more than 7 million Social Security beneficiaries will receive their first monthly check with the 8.7% increased Cost of Living Adjustment (COLA) that seeks to help these Americans battle the effects of inflation.
When was the new annual increase announced?
The new annual increase was announced on October 13 in conjunction with the release of inflation data from the US Department of Labor’s Bureau of Labor Statistics for the month of September.
Why will the increase be 8.7%?
The adjustment was created to help this population deal with the increase in the cost of products and services.
Depending on inflation levels will be the amount of increase per COLA. The higher the estimate, the more money retirees and other groups who benefit from Social Security Administration (SSA) programs will receive.
Although inflation has been coming down, it remains at historically high levels.
In June, the Labor Department’s Bureau of Labor Statistics put the figure at 9.1%. The latest data places it at 7.1%.
The purpose of the COLA is to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation, according to the SSA on its website.
The COLA was established by legislation in the United States Congress as part of the Social Security Amendments of 1972. Automatic annual adjustments began in 1975.
“Beginning in 1975, Social Security began automatic annual cost-of-living adjustments. The change was promulgated by legislation that links COLAs to the annual increase in the Consumer Price Index (IPC-W)”, details the website.
When before was an increase of this dimension reported?
The large sum is comparable to the increases applied in the early 1980s.
The highest increase based on adjustment was 14.3%. in July 1980.
In July 1981, beneficiaries of Social Security programs received an 11.2% COLA increase, the second highest.
The third largest increase was recorded in July 1979 and amounted to 9.9%.
How is the COLA established?
The COLA is established by examining the Consumer Price Index for Salaried Workers in Urban Areas and Clerical Workers (CPI-W).
The index is a comparison of the inflation levels of the third quarter of the current year (July, August and September) and that of the previous year.
If a percentage increase in the index is detected from the third quarter of last year to the third quarter of the current year, then the COLA increases.
In short, if the current CPI-W is higher than the previous one, Social Security recipients will receive an increase next year.
How much more monthly money will the beneficiaries receive?
In 2023, retirees will receive on average more than $140 per month for a total payment of approximately $1,827 each period, compared to $1,681 in 2022.
The Senior Citizens League estimates that Americans who now receive a monthly payment of $1,656 will receive an additional $144.10 each month starting in January.
Who will be the first to receive the payment with the increase this December 30?
Disabled and low-income recipients receiving Supplemental Security Income (SSI) funds will be the first to receive their checks starting this Friday, December 30. This is because usually these people are paid on the 1st of each month. However, that day is New Years or a holiday and the 31st falls on a Saturday, so the agency will process the checks in advance.
When will the rest of the Social Security beneficiaries receive their first increased check?
The rest of the beneficiaries, some 64 million, will receive the first payment with the increase in January.
The SSA follows a mailing schedule based on citizens’ birth days.
The office processes the rounds every Wednesday of the month.
Following the payment to SSI recipients, those who claimed their Social Security payments before May 1997 or who receive both Social Security and SSI funds would receive their check on January 3rd.
For the next three weeks, Social Security will process the rest of the checks to retirees.
Here you can see the detailed distribution schedule.
How is the SSA giving notice of the increase?
During this month of December, the entity has been sending letters by postal mail to all beneficiaries to inform them of how much the increase will be and other important information about the new increase.
Additionally, those who have a “my Social Security” account on the SSA website will receive COLA updates.
The free tool also allows users to do other things like requesting a replacement Social Security card, checking the status of an application and estimating future benefits.