Social Security COLA Changes: How They Affect SSD Benefits

Important: We updated this article in April 2023 to make sure all info below is both current and correct. In 1975, the Social Security Administration (SSA) began reviewing the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The SSA does this to determine annual cost-of-living adjustment changes (COLA) for disability beneficiaries. Think of this adjustment as a small “raise” for people’s monthly disability checks. Social Security COLA changes varied significantly over recent decades. However, some years didn’t see any COLA updates at all. It’s interesting to track these Social Security COLA changes, since they impact millions of Americans.

Social Security COLA Change for 2023 Brings Largest Raise Since 1981

The latest Social Security COLA increase (8.7%) is massive compared to last year’s 5.9% raise. In fact, it’s the largest single-year COLA raise since 1981. Here’s how the current COLA affects anyone approved for federal disability payments:

• SSDI beneficiaries: Maximum monthly payment in 2023 is $3,627. However, the average monthly payment is now $1,483. The average disabled worker with a spouse and at least one child younger than 16 receives $2,616 per month in SSDI benefits.
• SSI beneficiaries: Maximum monthly individual benefit is now $914 per month. And for couples, it’s $1,371 total each month.

How Did the SSA Calculate This Latest Social Security COLA Change?

Social Security COLA equals index growth from the highest Q3 average CPI-W recorded (usually the previous year) to the average CPI-W for Q3 this year. In plain English, the CPI tracks inflation and how much prices changed over 12 months. For example: In 2021, gas cost $3.03 per gallon. But in 2022, most Americans paid $3.98 per gallon for gas. The CPI-W averages how much that gas cost consumers in every U.S. state. Then, the CPI-W converts that number into a percentage. (This annual CPI calculation also includes average price for services and wages in the U.S.)

This means in September 2022, people that track CPI-W saw average prices go up about 8.7% over September 2021 prices. So in October 2022, the government approved an 8.7% Social Security COLA raise. This 8.7% higher Social Security COLA payment is effective from December 31, 2022 through December 31, 2023. If average prices for goods, services and wages fall or stay the same, then there’s no COLA increase. But if prices go up, then COLA rises again.

Before 1975, legislation set any increase in disability benefit payments. Since 1975, the SSA uses the CPI-W to determine any annual COLA changes.

Why Isn’t There A Social Security Raise Every Single Year?

You’re probably thinking, “prices still keep going up every year. Why don’t my benefits pay more each year, too?” Here’s why: If average prices go down or stay the same the next year, there’s no Social Security COLA increase. Here are the most recent years without a COLA increase (or payments rose less than 1%):

• 2009
• 2010
• 2015
• 2016 (.3% increase)

To see each year’s Social Security COLA change percentages, take a look at this table on the SSA’s website.

Tracking Higher COLA Changes From Decades Past

When these Social Security COLA adjustments began in the mid-1970s, they were significant. Annual inflation was extremely high in the 1970s (much higher than it is today). So, any Social Security COLA changes reflected that high inflation rate. For example, in 1975, SSD benefits increased 8% over the previous year. Then in 1979, they increased another 9.9%. Social Security COLA saw a record 14.3% increase in 1980, then that amount rose another 11.2% in 1981. Since that first decade using the new CPI-W calculation formula, most Social Security COLA increases seemed steady, but fairly low. Throughout the 1980s, Social Security COLA rose between 1%-4% every year. The biggest COLA increases since then happened in 2022 (8.7% increase) and 2021, which saw a 5.9% raise in benefits.

With no measurable COLA changes from 2015-2016, many disability beneficiaries welcomed the last few raises. According to the SSA, the latest COLA change added $146 in monthly Social Security retirement benefits, on average. That brought the average Social Security payment up from $1,681 per month in 2022 to $1,827 in 2023. For SSD beneficiaries, average payments rose from $1,364 per month in 2022 to $1,483 this year.

Which Years Had The Highest Social Security COLA Raises Since 1975?

Since 1980, only a handful of years saw COLA increases that rose above 4%. Below, we’ve listed the highest COLA increase years going back to 1975:

• 1975: 8%
• 1976: 6.4%
• 1977: 5.9%
• 1978: 6.5%
• 1979: 9.9%
• 1980: 14.3%
• 1981: 11.2%
• 1982: 7.4%
• 1987: 4.2%
• 1989: 4.7%
• 1990: 5.4%
• 2005: 4.1%
• 2008: 5.8%
• 2021: 5.9%
• 2022: 8.7%

If you average each year’s COLA going back to 1975, it’s 3.8%. Since 2000, the average increase is just 2.6%. And since 2012, that average shrank to just 2.5% over the last decade.

Whose Benefits Go Up With Every COLA Increase?

Each year’s COLA impacts retired workers receiving Social Security payments, those receiving Supplemental Security Income (SSI) and disabled veterans. Social Security COLA doesn’t directly impact federal military retirement program benefits. However, these programs use the same timeframe and measuring formula as the SSA to compute the next year’s pay amounts.

About 77% of Social Security benefits go to retired workers, their spouses and children. Another 11.6% goes to disabled workers, their spouses and children. Lastly, 11.5% of Social Security benefits go to eligible survivors of deceased workers.

More than one in four 20-year-olds today will become too disabled to work before full retirement age (67). Yet in February 2023, just 2.6% of the U.S. population received Social Security disability benefits. More than 6.5x as many Americans (57,479,000 people) get Social Security retirement or survivors’ benefits.

You May Qualify for Legal Assistance

Wondering if you might qualify for SSD benefits this year? Many people find the application process confusing. It can take weeks or months just to fill out and file all your paperwork. Then, you’ll wait 3-5 months, on average, to hear back from the SSA. However, having a lawyer file your claim makes benefit approval nearly 3x more likely! In fact, people who qualify for legal assistance usually get $13,800 in back pay as well as monthly benefits. Those who apply on their own without expert help usually appeal at least twice. In other words, those people wait 18+ months for SSD payments, but most get nothing at all.

A Social Security lawyer charges nothing for claim help by phone. If the SSA won’t approve your claim, then you owe the lawyer $0. And if you do win benefits, then your lawyer receives one small fee.

Want free expert claim help without leaving your home? Click the button below now to sign up for a free phone call during normal business hours:

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