Things are getting difficult out there with inflation running high. This is especially true for those receiving Social Security Disability Insurance (SSDI) benefits. Will there be a 2023 SSDI Increase? Here’s what to expect.
What Could the 2023 SSDI COLA Be?
We previously ran estimates on a potential increase a few months ago. At the time, experts were predicting an approximate 7.6% Cost of Living Adjustment (COLA) increase in SSDI payments. Now, that increase is expected to be even higher. Even low estimates are looking like 8% with higher estimates going all the way up to 11%.
How Much Would Your Monthly SSDI Check Increase?
SSDI is based on your previous work history. Unlike other programs such as SSI where the payments are largely universal at least once you know a few of the variables, SSDI is going to vary, at least a little bit, person to person.
All you have to do to get some estimates is take the expected COLA (anywhere from 8% to 11%), turn it into a decimal (so .08 or .11), add 1, and multiply your current benefit by it to get an estimate on your new benefit.
For example, the average monthly check in 2022 is about $1,657. If we assume an 8% increase, then we would multiply $1,657 by 1.08 to get an estimated benefit of about $1,790 or $133 more per month. If we try the higher estimated COLA of 11% that would be $1,657 times 1.11 for a new estimated benefit of about $1,839 or an increase of $182.
What is the COLA Based On?
Calculating the COLA for a given year is actually quite complicated. It is based on a specific consumer price index (CPI) known as the CPI-W. In simplified terms, this index when compared against past data sets of itself measures inflation. There are a lot of ways to measure inflation, and there has been some debate on whether using CPI-W specifically addresses inflation for SSDI recipients.
One thing that is worth stressing is that a COLA is not like a raise. In fact, for some, it may be too little too late. With higher-priced goods making daily living difficult for many SSDI recipients, the upcoming, potentially record-breaking COLA for 2023, will be vital.
Will 2023 See a Record COLA Increase?
It is doubtful that the COLA will be as high as it was in the early ‘80s when it set its record high at 14.3% in 1980 just 5 years after cost of living adjustments were first instituted for SSDI payments. The following year, in 1981, it was 11.2% which is the second highest COLA ever. Since then the highest COLAs were 7.4% in 1982 and 5.9% just last year. With all that said, we will likely see the highest COLA since 1981 next year.
When Will We Know What the 2023 SSDI COLA is?
Since 1983, the increase has been based on a comparison of the CPI-W for the third quarter of the current year to the third quarter of the previous year. This means that all the data can’t get analyzed until the third quarter of the current year passes into the books. You can expect to learn the new 2023 COLA sometime in October, potentially on October 13th, 2022.
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