For many, Social Security Disability Insurance (SSDI) is an essential source of financial support. But with the increasing price of groceries and other essentials, it can be challenging for a person to meet their needs when income levels do not increase along with prices.
Fortunately, SSDI benefit levels account for increased prices through a process known as the cost of living adjustment, often referred to as COLA.
The cost of living adjustment
Each year, the Social Security Administration (SSA) calculates how much the cost of living for an average person has increased. The SSA then uses this calculation to make a Cost of Living Adjustment by increasing benefit payments to account for the increased cost of living.
The high level of inflation over the past year provides an excellent example of how a COLA works.
Government statistics indicate that the average cost of many goods, such as groceries and gasoline, increased by anywhere from 6 to 11% in the past year. As a result, an SSDI recipient would be unable to purchase the same quantity of goods unless benefits payments increased.
To account for this, the SSA automatically increased benefit payments by 8.7% for 2023. This way, those who have applied for and received SSDI are able to keep up with the increased cost of living that results from inflation.
Calculating the COLA
The SSA bases the COLA on the Consumer Price Index, which factors in the cost of items purchased by ordinary households each month. For example, the Consumer Price Index considers the cost of groceries, utilities, transportation, health care, entertainment and housing.
If you are facing disability and need to apply for SSDI benefit, you should consult with an experienced attorney for assistance in applying for these critical benefits.