This year, inflation has hit highs that the United States hasn’t seen since the early 1980s. Based on the Consumer Price Index (CPI), which measures the average price increases for a wide variety of goods and services, our most recent inflation rate is 8.5%. This means that on average, households are now paying 8.5% more for goods and services than they were just 12 months ago.
For people living on a fixed income, high rates of inflation can be particularly difficult to navigate. Their money can’t go as far as it used to, and last year’s budgets, (which were already tight), need to be stretched even further.
Thankfully, for people with Social Security Disability Income (SSDI) and Supplemental Security Income (SSI), Congress enacted legislation almost 50 years ago that provides for cost-of-living adjustments to ensure their benefits keep pace with inflation. Known as COLAs, these adjustments are announced every October and applied to benefits the following year.
Last year’s COLA rate for 2022 was 5.9%. Since the adjustment percentage is calculated by averaging CPI numbers for the third quarter of the year, we wouldn’t have known what the 2023 rate would have been until the U.S. Bureau of Labor Statistics released its numbers for August and September.
If inflation does not come down, then those receiving benefits can expect their monthly income to increase by at least 8.5%. This would be the highest COLA since 1981, when the adjustment was a whopping 11.2%.
Until October, when the Social Security Administration will announce the new COLA, those on disability benefits will have to do their best to weather rising costs while they wait to learn what their financial resources will be next year.
Note: The COLA rate is calculated using the CPI for Urban Wage Earners and Clerical Workers.
