Social Security Benefits COLA 2023

By Brent Meyer — SafeMoney.com Founder & Editor Reviewed by Licensed Financial Professionals  |  SafeMoney.com — Trusted Since 2011  |  Updated Regularly Quick Answer: Discover the 2023 Social Security COLA details and how it impacts your retirement planning. Learn more at SafeMoney.com. The news for the Social Security cost-of-living adjustment (COLA) for 2023 is out. There will be a significant COLA for recipients in 2023, and it will be the largest boost in four decades. This is good news for retirees and others receiving Social Security benefits , as it means that their benefits will increase next year to keep up with the rising cost of living. The COLA for 2023 will be a historic 8.7%, according to the Social Security Administration. This will be the largest COLA since the 11.2% boost in benefits that took place in 1982. To put things in perspective, last year Social Security had a 5.9% increase in benefit payments. Keep reading to learn more about how the COLA is calculated and what it means for you, especially in this period of inflation . How Is the Social Security COLA Calculated? The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is used to calculate the COLA for Social Security benefits. The CPI-W measures changes in prices for urban consumers across the United States using eight major categories of spending along with subcategories. When there is a significant measurable increase in the CPI-W from one year to the next, there is typically an increase for Social Security benefits. According to the Bureau of Labor Statistics , oil and energy prices are one of the most significant drivers of the CPI-W, as well as consumer staples such as food and housing. Medical care costs are also a significant factor in the CPI-W calculation. What Does the 8.7% COLA for 2023 Mean for You? An 8.7% COLA increase is great news for retirees who need their income to keep up with the rising cost of living. With inflation on the rise, the cost of living adjustment for 2023 will help retirees maintain their standard of living. The average monthly benefit amount is currently just below $1,600. So, it may see an increase of about $135 per month next year if this estimated COLA goes into effect. Of course, your actual benefit amount may be different depending on your personal situation. The size of your benefit check depends on how much you paid into Social Security during your working years. How Much More Is Inflation Expe