2023 COLA will be 8.7 percent
The Social Security Administration announced today that monthly benefits will increase by 8.7 percent next year, the largest increase in 40 years.
Medicare Part B premiums have already been announced, and will decrease to $164.90 from $170.10 this year. (Here’s my piece explaining the decline.) Because these premiums are deducted from Social Security benefits, seniors will see even larger gains in their net retirement benefits.
Of course, rampant inflation is the driver of next year’s big COLA (cost of living adjustment), so the net effect of today’s announcement may just be that seniors will break even for a change.
Higher wage gains, also tied to inflation, will drive up the wage cap for payroll taxes next year to $160,200 from $147,000 this year. Other changes are detailed in an agency fact sheet.
In most years, the COLA plus Part B increases have failed to keep pace with inflation. There also is widespread concern among senior advocacy groups that the measure of consumer prices used to set the COLA – the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) – does not reflect prices that older Americans pay for their living expenses, particularly for their medical care.
That was true in the past, but not lately, according to the Center for Retirement Research at Boston College. (A tip of the cap to my colleague and friend, Mark Miller, for pointing this out in a recent New York Times piece.)
For data nerds, here’s a record of COLAs back to 1975.
And here’s a look at changes in annual Part B premiums:
Year Premium
1970 $ 4.00
1975 $ 6.70
1980 $ 8.70
1985 $ 15.50
1990 $ 28.60
1995 $ 46.10
2000 $ 45.50
2005 $ 78.20
2010 $110.50
2015 $104.90
2016 $121.80
2017 $134.00
2018 $134.00
2019 $135.50
2020 $144.60
2021 $148.50
2022 $170.10
2023 $164.90
Philip Moeller is the principal author of the Get What’s Yours series of books about Social Security, Medicare, and health care. @PhilMoeller