The Social Security Administration (SSA) has announced that the cost of living adjustment (COLA) for 2023 will be 8.7 percent, the highest increase since 1981, the New York Times reported. The increase is based on the 8.2 percent Consumer Price Index (CPI) for September, announced by the Department of Labor. In addition the Part B premium for Medicare enrollees will be lower next year.

According to the SSA’s latest monthly statistical snapshot, for September, the total number of beneficiaries 65 or older was 52.6 million. An additional 17.8 million people younger than 65 receive benefits, including survivors of insured workers and recipients of disability benefits‌ and Supplemental Security Income, the program for those with very low income.

The SSA began awarding the annual inflation in 1975, based on a formula legislated by Congress. The formula uses a broad measurement of consumer prices, the CPI for urban wage earners and clerical workers. The agency averages these figures from the third quarter of each year and compares them with the figures from the previous year.

Some economists have advocated for a different formula that seeks to measure the impact of inflation on seniors more accurately. That measure has generally run about two-tenths of a percentage point higher than the current one. But, according to the Times, this measure would not yield a higher COLA.

The average monthly Social Security payment for beneficiaries in 2021 was $1,658.