The COLA will increase by 8.7 percent for 2023, the SSA confirmed on Oct. 13. But not all federal retirees will see that amount added to their checks. Those in the Federal Employee Retirement System will receive a 7.7 percent COLA starting in January.
Starting Next Year
While the announcement came Thursday, the increased payments won’t be distributed until January, according to the SSA.More than 65 million Social Security beneficiaries will get an increase. The average recipient will receive more than $140 extra a month beginning in January, according to estimates released by the SSA.
‘Not a Benefit Increase’
One analyst noted that the cost-of-living adjustment is merely designed to keep pace with year-over-year inflation. The consumer price index report released by the Department of Labor on Thursday showed September’s inflation rose 8.2 percent, staying at near 40-year highs.The announcement for a large increase in 2023 isn’t a surprise, according to Ken Thomas, national president of the National Active and Retired Federal Employees Association, due to rising consumer prices and surging inflation.
Previous Increases
Since 2000, it’s averaged 2.3 percent as inflation remained remarkably tame through all kinds of economic swings. During some of the toughest years in that stretch, the bigger worry for the economy was actually that inflation was running too low.Since the 2008 financial crisis, the U.S. government has announced zero increases to Social Security benefits three times because inflation was so weak.
Last October, the SSA announced a 5.9 percent increase, which itself was the largest in about four decades.
Smaller Payouts
The expected increase means the Social Security system will pay out more money sooner, which can add more strain on its trust fund.
The annual Social Security and Medicare trustees report released in June says the program’s trust fund will be unable to pay full benefits beginning in 2035.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 percent of scheduled benefits.
The Associated Press contributed to this report.
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