The Social Security Administration just announced the biggest cost of living adjustment in four decades in response to record high inflation. The annual inflation adjustment for 2023 is 8.7%, compared to 5.9% for 2022, meaning the country's 70 million Social Security beneficiaries will see a monthly increase to benefit checks of $145 per month on average beginning Dec. 30, per the Washington Post. That's the biggest annual adjustment since the 11.2% increase in 1981. The adjustment, meant to ensure individuals can keep up with the rising cost of goods and services, is set by price inflation in the third quarter, meaning July through September. The annual inflation rate in July and August was 8.5% and 8.3% respectively. The inflation rate in September, announced Thursday, was 8.2%.
The nonprofit Senior Citizens League predicted an adjustment of 8.7%, which policy analyst Mary Johnson told CBS News would be "a nice bump." However, critics say boosting a typical benefit from $1,658 to $1,803 per month won't be enough to address soaring costs. They argue the inflation measure used in the calculation—the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, covering roughly 29% of the US population—places too much weight on gasoline and transportation costs and too little on medical costs to reflect what older Americans are spending, per NBC News. While older Americans represent the largest group of recipients, 9 million disabled workers and their dependents and 6 million widows, widowers, and their dependents also receive benefits. (Read more Social Security stories.)