SSDI payments rose 8.7 percent in 2023, the largest increase in four decades

The Social Security Administration raised SSDI (Social Security Disability Insurance) payments by 8.7 percent effective January 2023. This was a Cost of Living Adjustment, or COLA. The increase applied to everyone receiving SSDI that month—no process or action required on your part. If you were on the rolls in January 2023, your payment went up automatically.

The 8.7 percent figure was tied to inflation measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) in the third quarter of 2022. Because inflation was unusually high that year, the COLA was the largest since 1981. In dollar terms, the average SSDI payment rose from roughly $1,350 to roughly $1,470 per month, though your own increase depended on what you were receiving before the adjustment.

This was a one-time adjustment for that year. COLA amounts change every year based on inflation data from a specific three-month window. The 2024 COLA was 3.2 percent. The 2025 COLA is 2.5 percent. Each January, SSA announces the new rate and applies it to all benefit payments that month forward.

Key Takeaways

  • SSDI payments increased 8.7 percent in January 2023 due to a Cost of Living Adjustment tied to inflation.
  • The increase was automatic—you did not have to do anything to receive it if you were on SSDI in January 2023.
  • COLA amounts vary year to year based on inflation data from the third quarter of the prior year.
  • Your actual dollar increase depended on your payment amount before the adjustment, so two people did not necessarily see the same increase.

How COLA is calculated and announced

The Social Security Administration calculates COLA using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a measure of inflation published by the Bureau of Labor Statistics. SSA looks at the average CPI-W for July, August, and September of the year before the adjustment takes effect. If that average is higher than the same three-month average from the prior year, the difference becomes the COLA percentage.

SSA announces the COLA for the coming year in October. For the 2023 increase, the announcement came in October 2022. You can find the announcement on the Social Security website or in your annual Social Security statement. The adjustment then takes effect the following January for all people receiving benefits that month.

If inflation is flat or negative—meaning prices did not rise or actually fell—there is no COLA that year. This happened in 2010, 2011, and 2016. Your payment stayed the same. Since 1975, when COLA became automatic, there have been only three years with no increase.

Why 2023 saw such a large increase

The 8.7 percent COLA in 2023 reflected unusually high inflation in 2021 and 2022. The Consumer Price Index rose sharply during that period due to supply chain disruptions, increased demand for goods, and other economic factors. By the time SSA measured inflation in the third quarter of 2022 (July through September), prices had risen significantly compared to the same months in 2021.

This was the largest COLA since 1981, when inflation was also very high. Most years, COLA ranges from 1 to 3 percent. The 2023 increase was exceptional. It meant that SSDI recipients saw their purchasing power recover somewhat after years of smaller adjustments, though whether the increase fully offset the cost of living increases people experienced in other areas (housing, medical care, food) varied by individual.

How the increase affected your payment amount

If you were receiving SSDI in January 2023, your payment increased by 8.7 percent. The calculation was straightforward: SSA took your December 2022 payment amount and multiplied it by 1.087. The result was your new payment starting in January 2023.

Because people receive different amounts based on their work history and the age at which they became disabled, the dollar increase varied. Someone receiving $1,000 per month saw an increase of $87. Someone receiving $1,500 per month saw an increase of $130.50. The percentage was the same for everyone, but the dollar amount depended on what you were already receiving.

The increase also applied to any family members receiving benefits on your record—a spouse, ex-spouse, or child. Each person's payment rose by the same 8.7 percent. If you were receiving Supplemental Security Income (SSI) in addition to SSDI, SSI payments also increased by 8.7 percent that January.

COLA and your Medicare premiums

Most SSDI recipients are also enrolled in Medicare Part B (medical insurance) and Part D (prescription drug coverage). When COLA increases your SSDI payment, your Medicare premiums may also change. However, there is a rule called the Government Pension Offset that can affect how much of your COLA increase you actually keep.

In most years, if your Medicare premium increases, SSA holds your SSDI payment harmless—meaning they do not let the premium increase reduce your net payment. Your SSDI payment goes up by the full COLA amount, and your premium increase is absorbed elsewhere in the Medicare system. However, in years when Medicare premiums rise sharply, this rule can be complex. For 2023, most people kept the full 8.7 percent increase in their SSDI payment despite Medicare premium changes.

To see exactly how the 2023 COLA affected your specific situation, check your Social Security statement or contact SSA directly. Your payment stub from January 2023 should show the new amount.

COLA in future years and how to track it

COLA amounts change every year. The 2024 COLA was 3.2 percent. The 2025 COLA is 2.5 percent. These smaller increases reflect lower inflation in 2023 and 2024 compared to 2022. Future COLA amounts will depend on inflation data measured in the third quarter of each coming year.

You can find the current and historical COLA rates on the Social Security website under "Cost of Living Adjustments." SSA also includes the COLA percentage in your annual Social Security statement, which you can view online through your my Social Security account. If you do not have an account, you can create one at ssa.gov.

Some people track COLA announcements because they affect not only SSDI payments but also Supplemental Security Income (SSI) payments, Medicare premiums, and other benefits tied to Social Security. The announcement always comes in October for the adjustment taking effect the following January.

What COLA does and does not cover

COLA is designed to help your SSDI payment keep pace with inflation—the general rise in prices across the economy. It is based on the Consumer Price Index, which measures the cost of a broad basket of goods and services. However, COLA does not account for changes in specific costs that may affect you personally.

For example, if housing costs in your area rose faster than the national average, or if your medical expenses increased more than the general inflation rate, the COLA increase may not fully cover your actual cost increases. Conversely, if prices in your area rose slower than the national average, the COLA may be more than you need. COLA is a uniform adjustment for everyone, not a personalized one.

This is why some people on SSDI still struggle financially even after a COLA increase. The adjustment helps, but it is based on national inflation data, not your individual circumstances.

Frequently Asked Questions

Do I have to do anything to get the COLA increase?

No. If you were receiving SSDI in January when the COLA takes effect, the increase is automatic. SSA applies it to your account and your payment goes up that month. You do not need to contact SSA, submit any forms, or take any action.

What if I started SSDI after the COLA took effect?

Your first SSDI payment will already include the COLA adjustment. SSA calculates your benefit amount using the current formula, which reflects the COLA that has already been applied. You do not receive a separate increase later.

Can I see how much my payment increased in 2023?

Yes. Compare your December 2022 payment stub to your January 2023 payment stub. The difference is your COLA increase. You can also view your payment history in your my Social Security account online, which shows each month's payment amount going back several years.

Does COLA explore to SSI as well as SSDI?

Yes. If you receive Supplemental Security Income (SSI), your payment also increased by 8.7 percent in January 2023. SSI and SSDI COLA adjustments happen at the same time and use the same percentage, though the dollar amounts differ because SSI and SSDI payments are calculated differently.

Will there be another large COLA increase like 2023?

That depends on inflation. COLA is tied to the Consumer Price Index, so if inflation rises sharply again, COLA could increase. However, inflation in 2023 and 2024 was lower than in 2022, so the 2024 and 2025 COLA adjustments were smaller. Future COLA amounts will reflect whatever inflation occurs in the third quarter of each year.