The 2023 COLA raised SSDI payments by 8.7 percent

In October 2023, Social Security increased all SSDI payments by 8.7 percent. This was the largest increase in four decades. The raise took effect with the November 2023 payment, which arrived in December for most recipients.

The increase happened because inflation during 2022 was high enough to trigger an automatic adjustment. Social Security measures inflation using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). When prices rise significantly from one year to the next, the law requires Social Security to raise benefit amounts so that the money you receive keeps pace with what things actually cost.

This was not a one-time bonus or a special program. It was the annual cost of living adjustment, or COLA, that Social Security makes every year when inflation warrants it. Some years the adjustment is smaller. Some years there is no adjustment at all. The 8.7 percent figure applied to everyone on SSDI, regardless of how long they had been receiving benefits.

Key Takeaways

  • The 2023 COLA of 8.7 percent meant that if you received $1,000 per month in October 2023, your November payment was approximately $1,087.
  • The increase was automatic and applied to all SSDI recipients; you did not need to report anything or take any action to receive it.
  • The adjustment was based on inflation measured during 2022, not on your individual circumstances or work history.
  • Higher SSDI payments can affect other benefits you receive, such as Supplemental Security Income (SSI) or housing information, so it is worth checking with those programs about how the raise changed your situation.

How the 8.7 percent increase worked in real dollars

The percentage increase was the same for everyone, but the actual dollar amount you received depended on what your benefit was before the raise. Someone receiving $800 per month got an increase of about $70. Someone receiving $1,500 per month got an increase of about $130.

Social Security rounds the new amount to the nearest dime. This means your actual increase might have been a few cents more or less than the exact 8.7 percent calculation. The agency publishes the new benefit amount in a notice they mail to you, usually in November, showing what your payment will be starting that month.

If you were receiving SSDI as a family (meaning your children or spouse also received benefits based on your work record), each person's benefit increased by 8.7 percent. The total family payment went up accordingly.

Why 2023 saw such a large adjustment

The 8.7 percent COLA in 2023 was unusually large because inflation in 2022 was unusually high. Prices for food, energy, housing, and most other goods and services rose sharply that year. Social Security's formula captures these price changes and converts them into a percentage increase for the following year's benefits.

The CPI-W, which Social Security uses to calculate COLA, measures what urban wage earners and clerical workers actually spend money on. It includes rent, groceries, utilities, transportation, and medical care. When the average cost of these things rises significantly, the COLA rises with it.

This does not mean the 2023 COLA solved inflation or made your money go as far as it did before prices rose. It means Social Security adjusted your benefit so that the purchasing power of your check did not fall as far behind as it would have without the increase. Whether 8.7 percent matched the actual inflation you experienced in your own life depends on what you spend money on and where you live.

How the 2023 COLA affected other benefits you might receive

If you receive both SSDI and Supplemental Security Income (SSI), the higher SSDI payment may have reduced your SSI check. SSI has a monthly income limit, and SSDI counts as income. When your SSDI went up, your SSI might have gone down by the same amount or close to it.

If you receive housing information, food stamps (SNAP), or other means-tested benefits, the higher SSDI payment might have affected those programs too. Many information programs count your income and reduce benefits when income rises. You should contact each program separately to ask how the COLA change affected your benefits. The programs do not always coordinate with each other, so you may need to report the change yourself.

If you work and receive SSDI, the higher payment does not change your work incentives or the amount you can earn before your benefits are affected. The earnings rules remain the same year to year.

When you would have seen the increase in your bank account

The 2023 COLA took effect in November 2023. Most SSDI recipients receive their payment on the third of each month, so the first increased payment arrived on December 3, 2023. If you receive your payment on a different date (some people receive it on the 11th or 22nd, depending on when they were born), your first increased payment came on your regular payment date in December.

If you did not see the increase by mid-December 2023, contact Social Security to report the problem. You can call 1-800-772-1213 or visit your local Social Security office. Have your Social Security number ready.

What to expect for future COLA adjustments

The COLA for each year is announced in October and takes effect in November. Social Security will announce the 2024 COLA in October 2024, the 2025 COLA in October 2025, and so on. The amount varies depending on inflation during the previous year.

Some years there is no COLA at all. This happens when inflation is flat or negative. From 2009 to 2011, there were no adjustments. In 2016, there was no adjustment. In other years, the adjustment has been as small as 0.3 percent. The 8.7 percent increase in 2023 was exceptional.

You do not need to do anything to receive the COLA. It is automatic. Social Security calculates it, applies it to your account, and sends you a notice showing your new payment amount.

Frequently Asked Questions

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

No. The increase was automatic. Social Security applied it to every SSDI recipient's account without requiring any action on your part. You should have received a notice in the mail showing your new benefit amount, but the payment increase happened whether or not you received the notice.

What if I did not receive the full 8.7 percent increase?

If your increase was smaller than 8.7 percent, it may be because you also receive SSI, and the two benefits are coordinated. Or your payment may have been rounded. Call Social Security at 1-800-772-1213 with your payment stub or notice to ask why your increase was different.

Does the COLA increase count as income for taxes?

SSDI benefits are generally not taxable, and the COLA increase does not change that. However, if your total income (including SSDI) exceeds certain thresholds, some of your benefits may become taxable. A tax professional can tell you whether your situation changed because of the higher SSDI payment.

Will there be another COLA increase in 2024?

Social Security will announce the 2024 COLA in October 2024. Whether there is an increase, and how large it is, depends on inflation during 2023. You cannot predict it in advance, but Social Security will notify all recipients when the announcement is made.