How Big Will the COLA Be for Social Security? With inflation reaccelerating in May to the highest levels since 1981, the next annual cost-of-living increase for social security (COLA) is widely expected to increase by a historic amount.
Just how significant the increase will be, however, remains in question.
COLA Explained
COLA stands for “cost of living adjustment.” It is an increase in the amount of money provided to social security recipients. The purpose behind the adjustment is to ensure that anybody who received public funds is given sufficient funding to afford to pay for food, energy, and housing.
In 1973, legislation established cost of living adjustments to ensure that Social Security recipients would not be impacted by inflation. Under the Social Security Act, a formula determines the size of the annual increase based on the Consumer Price Index for Urban Wage Earners and Clerical Workers.
The most recent COLA was 5.9% for Social Security benefits and other SSI payments. The increase came into effect in December 2021, with the first new payments with the 5.9% increase applied made in January of this year.
An additional increase is expected by the end of the year, and some reports have suggested that the increase could be as large as 11%.
Could COLA Reach 11%?
If inflation continues at its current pace, senior citizens could see a COLA of 10.8% by early 2023 – the largest in over forty years.
In May, inflation hit 8.6%. According to a report from the Committee for a Responsible Federal Budget, a non-partisan organization that educates the public on fiscal policy issues, these levels of inflation could mean a COLA of almost 11% this year. And, even if inflation comes to an immediate halt in the last months of the year – which doesn’t seem likely at this stage – senior citizens should still expect a COLA increase of as much as 7.3%.
On Monday, the non-profit group said that the COLA increase for Social Security recipients next year will fall somewhere between those two figures – meaning that the average Social Security check will rise from $1,658 to $1,837 at the higher end of their predictions. At the lower end of the scale, the average check would increase to $1,790.
Either way, the increase is expected to be historic. A jump of just 8% would be the fourth biggest in the history of Social Security. It would be the same as 1975’s 8% increase, surpassed only by 1979’s 9.9% increase, 1981’s 11.2% increase, and 1980s 14.3% increase.
Social Security Receipts Sound Off
While any increase sounds great, those who rely on Social Security checks to survive don’t seem very enthusiastic even at the sound of the even a double-digit COLA increase, as many argue that the most common staples needed in their basic, day-to-day lives are going up much faster.
“Who cares. Yeah, 5 or 10% sounds really great for an increase in my Social Security check, but gas prices have gone up far more. Food prices have gone up far more. Also, the prices of my Medicare supplemental plan went way up last year. To be really honest, that increase is already spent. I barely have enough money to make it, to eat” explained one Newark, New Jersey Social Security recipient who asked to keep her name from being released.
“Americans on Social Security will take whatever we can get, but we can’t pretend that these increases are some miracle.”
Jack Buckby is a British author, counter-extremism researcher, and journalist based in New York. Reporting on the U.K., Europe, and the U.S., he works to analyze and understand left-wing and right-wing radicalization, and reports on Western governments’ approaches to the pressing issues of today. His books and research papers explore these themes and propose pragmatic solutions to our increasingly polarized society.