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Social Security applies a cost of living adjustment (COLA) yearly to SSI and SSD benefits as well as Social Security retirement benefits. The COLA adjustment is tied to the rate of inflation and changes every year. The purpose of the COLA adjustment is to ensure that the purchasing power of Social Security Disability benefits, SSI benefits, and retirement benefits is not eroded by inflation.
For instance, in 2022, the COLA increase for Social Security benefits was 5.9%. This meant that starting January 2022, your Social Security benefits went up almost 6% from what they were in December 2021.
Since we have seen historic interest rate increases in the year 2022, the projected COLA increase for Social Security benefits in 2023 is 9.6% according to the Senior Citizens League. AARP also estimates that the COLA increase for Social Security benefits will be between 8-10 percent. If this holds true, it would amount to the largest Social Security benefits increase since 1981. Below is a chart of the COLA increases for the last 10 years.
| Year | COLA rate (percent) |
|---|---|
| 2012 | 1.7 |
| 2013 | 1.5 |
| 2014 | 1.7 |
| 2015 | 0 |
| 2016 | 0.3 |
| 2017 | 2.0 |
| 2018 | 2.8 |
| 2019 | 1.6 |
| 2020 | 1.3 |
| 2021 | 5.9 |
Since the average Social Security retirement benefit is $1,656.00, the average increase at 9.6% would be $158.98. This is a substantial increase for disabled or retired individuals who are on a fixed income of SSI or SSD benefits.