Are Social Security Benefits Adjusted for Inflation?
Gas. Groceries. Home goods. Utilities. Inflation has recently gone up, up, and away—and consumers are certainly feeling the hit to their wallets. If you receive Social Security benefits, you’re probably worried: are your Social Security benefits adjusted for inflation?
Today, we’re tackling this important question. Keep reading to find out how inflation impacts Social Security and how much more you can expect on your SSDI benefits check.
Social Security & COLA
“COLA” stands for “Cost-of-Living Adjustments.”
Since 1975, the Social Security Administration has increased benefits based on increases to the cost of living. (Before 1975, benefit increases had to be set by legislation.) They decide on the increase based on the Consumer Price Index for Urban Wage Earners and Clerical Workers. (The Index is a monthly measure of prices paid over time for different types of goods and services.)
Cost of living increases come from inflation. Over time, goods and services cost more money—eroding your purchasing power. (When bread was 50 cents, you could buy 20 loaves with $10. Today, good luck buying just 3 loaves with that same amount of money!)
Historically, COLA increases have been as low as 0 percent (like in 2009, 2010, and 2015) to as high as 14.3 percent (in 1980). The COLA increase was higher in 1980 because of the high inflation rates in the late 1970s.
Today, we’re seeing similarly high inflation rates. In fact, consumer prices were up 9.1 percent between June 2021 and June 2022. That’s the largest increase since 1981! Recent inflation has been caused by COVID disrupting supply chains, labor shortages, and post-COVID high consumer demand.
That’s why it’s not surprising that the latest COLA is higher than average. The cost-of-living adjustment for inflation for 2022 was 5.9 percent. That’s the highest adjustment to benefits in 39 years.
What Does COLA Mean for Your Social Security Benefits?
Social Security adjusts for inflation based on a percentage of your monthly benefit. It’s not a specific dollar amount—which means your increase might be different from your spouse’s or your neighbor’s.
Social Security benefits were adjusted for inflation beginning December of 2021. December benefits are paid in January, so the increased benefits went out in January of 2022.
Here’s a quick look at how the average benefits increased in 2022 for different types of Social Security recipients:
|Type of Benefit||Before 5.9% COLA||After 5.9% COLA||Benefit Dollar Increase|
|Disabled widow or widower||$772||$818||$46|
|Disabled worker, spouse, and child||$2,247||$2,379||$132|
(Remember that the table above just shows the average benefit: your Social Security benefits could be higher or lower depending on your work history.)
If you were already on Social Security disability in December, you should have seen your benefits increase automatically. There’s nothing you need to do in order to claim your larger check.
For 2023, we expect that there will be another COLA from the Social Security Administration. Since inflation has remained higher than usual, it’s likely the COLA will be high as well.
The Committee for a Responsible Federal Budget (a non-profit public policy organization in Washington, D.C.) estimates that the COLA for 2023 could be as high as 10.8 percent. If you earned the average benefit of $1,358, that would net you an increase of about $146 a month. (Again, that increase might be different if your benefits are higher or lower than average.)
However, that number isn’t set in stone—so don’t go changing your budget or planning any big purchases yet!
We expect the 2023 increase to be announced soon—possibly this month.
What to Do about Inflation
Inflating is hitting everyone, but those on a fixed income (like people receiving SSDI benefits) are often hit the hardest. When you’re on a fixed income, every penny counts.
There are many articles online that have discussed how to cope with inflation. Many of them have good advice. This includes things like:
- Tracking your spending habits
- Revisiting (or creating) your budget
- Carpooling whenever possible
- Buying more fruits and vegetables (which haven’t increased much in cost)
- Taking advantage of sales and deals whenever possible
- Looking into state and federal programs for assistance with utility bills
However, some of these articles also recommend looking for side gigs to increase your income. But if you are on Social Security Disability, it’s important to check with an attorney before starting a new job!
Doing what’s called “substantial gainful activity” can result in you losing your benefits.
Need Help with Social Security Disability?
If you have questions about your benefits or want to apply for Social Security benefits, we’re here to help. Social Security Disability is complicated, but we make it easier!
Contact Casper & Casper today to speak with an experienced Social Security attorney.