Here’s when Social Security’s COLA will be announced

The easiest way to think about Social Security’s COLA is as a mechanism designed to consider the effects of inflation — the rising price of goods and services.

If it costs more to buy the same goods and services from one year to the next, ideally, Social Security checks increase by the same amount, so retired workers don’t lose purchasing power. COLA is the “raise” passed along most years to program recipients that inflation factor.

Before 1975, Social Security’s cost-of-living adjustments were wholly random and passed by special legislative sessions of Congress. But over the last 47 years, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) has been the program’s annual inflationary tether. Check the COLA official website for all the details.

Seniors are about to get some good news. Social Security payments will go up more in 2023 because the COLA is tied to inflation, and because Medicare premiums (often deducted from Social Security checks) are going down – a rare combination @RetireRevised https://t.co/MhrjqsG584

— Tricia Neuman (@tricia_neuman) October 9, 2022

The CPI-W has a long list of significant and minor spending categories, each of which has its respective percentage weightings. These weightings allow the CPI-W to be expressed as a single figure, which can easily be compared to the previous month or year to determine if prices for a predetermined basket of goods and services have risen or fallen.

To calculate Social Security’s COLA, the average CPI-W reading from the current year’s third quarter (Q3) (July through September) is compared to the average CPI-W reading from Q3 of the previous year.

Literally, everything you need to know about the COLA from ⁦@RetireRevised⁩, including that no matter how historically high it may be, it may still not provide those living on a fixed income enough, according to @gerontologyumb⁩’s Elder Index. https://t.co/EQMScqQnlk

— Ramsey Alwin 🦞 (@Ramsey_Alwin) October 9, 2022

Since the September inflation data hasn’t been released yet, we don’t have the final puzzle piece needed to calculate the cost-of-living adjustment for 2023 concretely.

But this all-important data release is just days away. On Thursday, Oct. 13, 2022, at 8:30 a.m. EDT, the U.S. Bureau of Labor Statistics (BLS) will release the September inflation data.

This will allow the current-year average CPI-W reading for Q3 to be calculated and compared to the previous year’s average CPI-W reading during Q3. The year-over-year percentage increase, rounded to the nearest tenth of a percent, will determine how much Social Security checks will climb in 2023.

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