According to a Social Security Administration announcement, claimants’ payments would rise by 8.7 percent in 2023. Around 65 million people who receive Social Security benefits and more than 7 million people who receive Supplemental Security Income will be subject to the cost-of-living adjustment (COLA). Due to the increase, the typical Social Security benefit check will increase by more than $140 each month.
The significant hike follows a 5.9% increase last year and is the most since 1981, when benefits climbed by a staggering 11.2 percent in response to an extraordinarily high inflation period in the United States.
An rise in the minimum amount of wages due to Social Security taxes, or the taxable minimum, goes hand in hand with an increase in benefits. Workers will be required to contribute to Social Security on wages up to $160,200 in 2023, up from $147,000 in 2022. The modification will take effect in January. However, in the next year, the tax rate on such wages, which is 6.2%, won’t change.
The increase in payments is great news for retirees and individuals who rely on Social Security for a sizable amount of their income in the face of skyrocketing inflation in 2022. As the cost of necessities keeps rising, those who rely heavily on these benefits have been hard hurt.
Even though seniors will benefit from the bigger monthly checks, the higher taxable minimum means that Americans with higher incomes may have to pay more in taxes to support the program.
Social Security recipients can check their my Social Security accounts for information or wait until December to learn their exact new benefit amount. With the most recent COLA, though, the average benefit check should increase nicely.
Comparing this increase to recent COLA hikes
The average Social Security beneficiary received a check for $1,547.87 per month as of September 2022. However, the typical retiree did slightly better, earning $1,673.88 each month.
What would be the new average monthly payment? The Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, is the basis for determining the rate of rise. These amounts would climb to approximately $1,683 and $1,820, respectively, with the announced increases for 2023.
The announced increases over the past ten years are listed below:
|Year||COLA increase||Year||COLA increase|
The increase this year far exceeds any in the recent past, and you would have to go all the way back to 1981 to see a bigger gain. Benefit reductions are not disclosed by Social Security. As opposed to doing so, it merely declines to announce an increase, as it did in 2010 and 2015.
To sum up
Social Security claimants had to endure skyrocketing prices in order to receive this year’s COLA, which is a welcome increase in income. Those who are about to file for benefits may wish to give considerable thought to the ideal time to do so. By filing your claim at the correct moment, you might earn tens of thousands more. Here’s how to calculate your retirement benefits.