COLA Social Security increase to be announced Thursday: Here’s what we know

(NEXSTAR) – Social Security recipients will soon know exactly how much their monthly payments will increase over the next year.

On Thursday, October 13, the Social Security Administration will announce its 2023 Cost of Living Adjustment (COLA). This is expected to be the largest increase in beneficiary payments in 40 years, reports The Hill’s Changing America.

The reason for the expected massive increase is the extremely high year-on-year inflation. Thursday’s COLA announcement coincides with the release of the September 2022 CPI.

The nonprofit Senior Citizen’s League recently forecast an 8.7% increase in Social Security benefits based on the latest CPI-W. (The CPI-W is essentially a measure of price change “for a basket of consumer goods and services,” writes the Bureau of Labor Statistics.)

Such an adjustment would increase the average monthly pension benefit – $1,656 – by $144.10.

To see how an estimated 8.7% adjustment would affect you, take your current payment and multiply it by 1.087. The resulting number would be your new payment in 2023.

“An 8.7% COLA is exceedingly rare and would be the highest most Social Security recipients alive today have ever received,” writes Mary Johnson, the Senior Citizens League’s Social Security and Medicare policy analyst, in a press release was released in mid-September.

Despite the announcement expected this week, the increased benefits for the country’s roughly 66 million Social Security recipients would not go into effect until January 2023.

Millions of seniors will save money over the next year thanks to a 3% reduction in monthly Medicare Part B premiums. According to the Associated Press, that translates to a monthly savings of $5.20 for most people.

Seniors won’t be the only ones to benefit from the change in Social Security payments. Beneficiaries include people with qualified disabilities and an estimated 4 million children whose parents are retired, deceased or disabled.