The 2023 SSDI payment increase was 8.7 percent

In October 2023, Social Security raised all SSDI payments by 8.7 percent. This increase, called a Cost of Living Adjustment (COLA), happens once a year and is meant to help benefits keep pace with inflation. The raise took effect on the first day of the month after Social Security announced it.

The exact dollar amount you received depended on what you were getting before October 2023. Someone receiving $1,000 per month would have seen that rise to $1,087. Someone receiving $1,500 would have risen to $1,630.50. The percentage was the same for everyone, but the dollar increase varied based on each person's individual benefit amount.

This was the largest COLA increase in four decades. The reason was unusually high inflation during 2022 and early 2023. In years when inflation is lower, the COLA increase is smaller — sometimes just 1 or 2 percent.

Key Takeaways

  • The 2023 COLA raised SSDI payments by 8.7 percent for everyone receiving benefits on October 1, 2023.
  • Your new payment amount depended on what you were receiving before the increase — the percentage was the same, but the dollar amount varied by person.
  • COLA increases happen once per year and are based on inflation data from the previous year.
  • The 8.7 percent increase in 2023 was unusually large because inflation was high in 2022 and early 2023.

How Social Security decides the yearly increase

Social Security does not choose the COLA amount. Instead, it is set by law based on a specific measure of inflation called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index tracks how much prices rise for things people buy — food, housing, transportation, medical care, and other goods and services.

Social Security calculates the increase by comparing the CPI-W from the third quarter of one year to the third quarter of the previous year. If prices went up 8.7 percent between those two periods, the COLA is 8.7 percent. If prices went up only 2 percent, the COLA is 2 percent. The law does not allow COLA to go down — if inflation is negative, the payment stays the same.

Social Security announces the COLA amount in October, and the increase takes effect the following month. This means you find out in October what your new payment will be starting in November.

When you receive the increase

If you were receiving SSDI on September 1, 2023, you automatically received the 8.7 percent increase in your October payment. You did not have to do anything — no form to fill out, no call to make. Social Security added the increase to your account and your payment went up on the first of the month.

If you started receiving SSDI after September 1, 2023, your first payment already included the new 8.7 percent rate. You would not have received a separate increase notice because you were not on the rolls before the COLA took effect.

If you were in a work trial period or had your benefits suspended, you still received the increase when your benefits restarted, as long as you restarted before the end of 2023.

Why 2023 was different from other years

The 8.7 percent COLA in 2023 was much larger than what people typically see. From 2009 to 2020, most COLA increases were between 0 and 2.8 percent. In 2021 and 2022, they were 1.3 and 5.9 percent. The 8.7 percent jump in 2023 stood out because inflation spiked in 2022 and stayed high into early 2023.

Inflation happens when the prices of goods and services rise. In 2022, prices for gasoline, groceries, housing, and utilities climbed sharply. The CPI-W reflected those higher prices, which pushed the COLA calculation up. By late 2023, inflation had started to come down, but the COLA for 2024 would be based on prices from mid-2023, when inflation was still elevated.

The size of the COLA matters because it affects how far your monthly payment stretches. A larger increase means your payment covers more of your actual living costs. A smaller increase means your payment buys less than it did the year before.

What happens to your benefits in future years

Every January, Social Security announces the COLA for the following year. The 2024 COLA was 3.2 percent, which was lower than 2023 but still higher than the historical average. The 2025 COLA will be announced in October 2024 and will take effect in January 2025.

You cannot predict what future COLA increases will be because they depend on inflation, which changes month to month. If inflation stays low, COLA increases will be small. If inflation rises again, COLA increases will be larger. Social Security has no control over this — the law ties the increase directly to the CPI-W.

If you are working while receiving SSDI, the COLA increase still applies to your benefit amount. The increase does not affect your work incentives or the earnings limit that determines whether your benefits are suspended.

How the increase affects other benefits you receive

If you receive Supplemental Security Income (SSI) in addition to SSDI, you also received an 8.7 percent increase to your SSI payment in 2023. The COLA applies to both programs.

If a family member receives benefits on your record — such as a spouse or child — they also received the same 8.7 percent increase. The increase was automatic for everyone on your account.

If you are receiving Medicare, the COLA increase does not directly change your Medicare premium. However, Social Security uses a rule called "hold harmless" that protects most beneficiaries from having their Medicare Part B premium rise faster than their COLA increase. This means your net payment — what you receive after Medicare is deducted — should not go down because of the premium.

Frequently Asked Questions

Did I have to do anything to get the 2023 increase?

No. If you were receiving SSDI in September 2023, the 8.7 percent increase was added to your account automatically in October. You did not need to contact Social Security or fill out any forms.

What if I disagree with the amount of my increase?

You cannot dispute the COLA amount itself — it is set by law based on the CPI-W. However, if you believe your benefit amount before the increase was wrong, you can contact Social Security to ask them to review your record. Call 1-800-772-1213 or visit your local Social Security office.

Does the COLA increase affect my work incentives?

The increase does not change your work incentives or the earnings limit that determines whether your benefits are suspended. If you were working and receiving benefits before the increase, the same rules explore after it.

Will the increase be the same next year?

No. The COLA for 2024 was 3.2 percent, which was lower than 2023. Future COLA amounts depend on inflation and are announced each October for the following year.