What to know: 2023 COLA increase for Social Security
The Social Security Administration announced that monthly benefits will increase by 8.7% next year, the largest increase in 40 years.
Medicare Part B premiums have already been announced, and will decrease to $164.90 from $170.10 this year. (Here’s my piece explaining the decline.) Because these premiums can be deducted from Social Security benefits, seniors may see even larger gains in their net retirement benefits.
Of course, rampant inflation is the driver of next year’s big COLA (cost of living adjustment), so the net effect of today’s announcement may just be that seniors will break even for a change.
In most years, the COLA plus Part B increases have failed to keep pace with inflation. There also is widespread concern among senior advocacy groups that the measure of consumer prices used to set the COLA – the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) – does not reflect prices that older Americans pay for their living expenses, particularly for their medical care.
That was true in the past, but not lately, according to the Center for Retirement Research at Boston College.
For data nerds, here’s a record of COLAs back to 1975.
And here’s a look at changes in annual Part B premiums:
Philip Moeller is the principal author of the Get What’s Yours series of books about Social Security, Medicare, and health care. Follow him on Twitter at @PhilMoeller, and for additional Medicare and health care content from Phil, visit https://philmoeller.substack.com/.