More than 70 million Americans who receive Social Security payments should anticipate the highest inflation increase to their monthly checks in four decades next year.
Disability claimants get a slight cost-of-living adjustment to their Social Security disability insurance (SSDI) or Supplemental Security Income (SSI) disability benefits every year. COLAs, which stand for cost-of-living adjustments, are the term used by the federal government to describe cost-of-living increases.
How Much is the Social Security COLA 2022?
The COLA for all Social Security and Supplemental Security Income (SSI) benefits for this year is 5.9%. If both spouses are eligible for SSI, the maximum federal SSI payout increases by $47 per month for an individual (up to $841 per month) and $70 per month for a couple (up from $1,191 per month).
Exact increases in Social Security disability benefits (SSDI) depend on the beneficiaries' lifetime earnings, but the average increase in 2022 for an SSDI claimant is $76 per month.
Purpose Behind Social Security's COLA
The goal of a COLA is to guarantee that inflation (the rise in the cost of goods and services) does not result in your benefits being insufficient to purchase the necessities of life. For example, if the average cost of products and services doubled in a year, you could only buy half as much with the same amount of money.
COLA from Social Security?
The Bureau of Labor Statistics of the United States Department of Labor calculates the Consumer Price Index on a yearly basis (CPI-W). The CPI-W estimates the average change in the prices of goods and services paid by individuals over time. The Social Security Administration (SSA) uses the CPI-W to determine whether or not there will be a COLA.
To get a COLA in a particular year, the CPI-W from the previous year's third quarter in which Social Security recipients got a COLA is compared to the CPI-W from the current year's third quarter. There will be no COLA if the CPI-W rises by less than 0.05% or falls by more than 0.05%. The COLA will be increased in January of the following year if the CPI-W rises by at least 0.1%.
Are Social Security's COLA Automatic?
COLA increases are automatic. If the CPI-W rises significantly, your benefits will get a cost-of-living adjustment. You are not obligated to contact or apply for the SSA. Persons receiving SSDI will begin receiving the increased benefit in January of the year to which the COLA applies, but people receiving SSI will begin receiving the additional payment in December of the preceding year. (For example, SSI beneficiaries will get their first payment rise owing to the 2022 COLA on December 30, 2021.)
COLA for Upcoming Year 2023
The cost-of-living rise for Social Security will be the largest in four decades, according to an estimate.
The 2023 COLA will benefit more than 70 million Americans, including 52.3 million people over the age of 65, as well as recipients' survivors and people receiving disability payments and Supplemental Security Income, a programme for the very poor. Retirees will discover the amount of the increase for 2023 in October, and the current estimate is that it will be 8.7%.