Social Security Increase- What This Means for You

Financial Planning Financial planning

October 31, 2022

How Will the Social Security COLA Affect Me?

This year, the Social Security Administration (SSA) authorized one of the largest Cost of Living Adjustments (COLA) in recent memory. In their effort to help ease the pain of inflation, the SSA authorized a COLA of 8.7% beginning January of 2023. This is the largest cost of living adjustment since the early 1980s.

Approximately 70 million Americans will see an 8.7% increase in their Social Security benefits and Supplemental Security Income (SSI) payments in 2023. On average, Social Security benefits will increase by more than $140 per month starting in January.

How Often is Social Security Adjusted for Inflation?

Most people don’t realize it but the Social Security Administration keeps a watchful eye on rising inflation. In fact, the SSA has taken the current cost of living into account when calculating payments since 1975, when it was decided that payments to seniors needed to be adjusted based on real buying power.

When Will I Know How Much I Am Entitled To?

In December, beneficiaries will receive a COLA notice by mail, providing the exact details of their new benefit amount. The SSA estimates that the average benefit paid to retirees will rise by $146 to $1,827 per month in 2023. The average annual increase will amount to $1,752.

The actual amount that you receive will depend on the age when you first claimed your Social Security as well as the general wage level throughout your work history.

If you have not already set up an account with Social Security, you will need to do this before you are able to use the calculator and track your Social Security benefits and history, but it is well worth doing to be able to have access to your information without needing to make a visit to one of the many Social Security customer service centers.  Just click on the button below to go to The Social Security Administration website to access the benefits calculator.

Click here to try the Social Security Administration’s Benefit Calculator

Other Changes to Expect in 2023

If you are still earning wages from a job along with collecting Social Security Benefits, the earnings limit for those under Full Retirement Age (FRA) as well as those over FRA have been increased. 

  • According to the Social Security Administration, those still earning income at FRA will see their earnings limit raised to $56,520 from the 2022 threshold of $51,960 before your social security benefits are reduced.
  • The maximum benefit amount has been raised to $4,555 per month – an increase of $361 per month.
  • The maximum taxable earnings limit has been increased from $147,000 per year in 2022 to $160,000 in 2023
  • The Cost of Living Adjustment affects other types of benefits such as spousal or divorce benefits, disability benefits and survivor benefits. Each type of benefit will be receiving higher payments in 2023.

The Takeaway

This year’s COLA will be the largest in over 4 decades. Beneficiaries will receive some much needed inflation relief, which will benefit Seniors on a fixed income. Visit the Social Security website for all of the latest changes and to calculate your estimated payment increase.