Social Security Benefits Will Receive A Historical Cost Of Living Adjustment Of 8.7%
Last Thursday, the Social Security Administration (SSA) officially announced next year’s Cost Of Living Adjustment (COLA). Social Security payments will rise by 8.7%, the fourth-highest increase in over 40 years.
Why Is 2023’s COLA Higher Than Previous Years?
Since 1975, inflation during the third quarter determined annual Social Security increases. From 2010 to 2020, the COLA increases hovered around 1-2%. However, post-pandemic economic recovery, global supply chain issues, and other external factors have made inflation the highest it has been in decades.
Recipients will see an increase of $146 to roughly $1,827 by next year. High inflation has raised the cost of living for everyone and has greatly affected those who rely on monthly benefits to pay their bills. For this reason, the SSA needs to set a rate that reflects rising living costs.
Who Will Benefit The Most From The COLA?
With roughly half of Americans living in households where social security benefits make up more than 50% of their income, the cost of living adjustments will benefit these families the most. However, the higher payments will help anyone who qualifies for Social Security or benefits like SSDI.
The COLA will also influence other government agencies with their COLA decisions. For example, the Center for Medicare & Medicaid Services states that Medicare Premium B premiums will decrease by 3%. Additionally, the Department of Veterans Affairs will likely implement a similar cost of living increase in VA benefits when it makes a final decision by December 1st.
When Will Social Security Benefits Run Out?
While a COLA will help offset the rising living costs in the short term, some people are worried about the Social Security trust fund running out faster than expected and may impact future generations. According to the Heritage Foundation, 2.8 million fewer people are working today compared to pre-pandemic levels.
Less tax-paying workers would mean dwindling payroll tax revenue and potentially eliminating Social Security benefits by 2035 if no reforms occur. As it stands now, employers may need to increase payroll taxes to maintain the current system, which will put a heavier tax burden on workers.
We Can Help You File Your SSDI Claim
An 8.7% cost of living increase will greatly help recipients who rely on these benefits to make ends meet. Since other organizations make their COLA decisions based on the SSA’s annual ruling, millions of vulnerable Americans, like veterans with disabilities, can expect similar increased payments.
If you need help filing your disability claim, our social security disability attorneys can guide you through the process. At Turley Redmond & Rosasco, L.L.P., we are committed to helping you win the benefits you deserve. Call us at 855-599-2141 or use our contact form if you have any questions about your case or want to schedule your free initial consultation today.