The U.S. Social Security Administration recently announced that Social Security beneficiaries can expect an 8.7% increase in benefits next year. This increase surpasses the 5.9% cost-of-living adjustment (COLA) in 2022, which, at the time, was the highest in four decades. This change is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers.
On average, Social Security benefits will increase by more than $140 per month beginning in January.
The announced Social Security adjustment comes as many beneficiaries have struggled with increasing prices due to inflation. The COLA applies to approximately 70 million Social Security and Supplemental Security Income beneficiaries, most of whom rely on Social Security for the majority of their income. Consequently, the COLA provides beneficiaries with inflation protection to help individuals maintain their standard of living.
Medicare B premiums and taxes may impact the amounts beneficiaries receive in 2023. The standard Medicare B premium will decrease by $5.20 next year, according to the Centers for Medicare & Medicaid Services. Accordingly, beneficiaries will likely be able to keep all COLA increases. However, the 2023 COLA could increase some beneficiaries’ tax returns in future years.
What Does This Mean?
Individuals who decide to claim Social Security benefits now will receive the record-high COLA. However, the COLA adjustment shouldn’t influence individuals choosing to begin claiming benefits because they will still receive every COLA whenever they eventually decide to do so. Experts generally recommend individuals delay as long as possible before claiming benefits, as it can increase the size of their monthly check.
Beneficiaries can expect to see the 2023 COLA in their benefits checks starting in January. Beneficiaries are usually notified by mail starting in early December about their new benefit amount. The fastest way for beneficiaries to find out their new benefit amount is to view the COLA notice online via their “my Social Security” account.
To explore additional retirement options and resources, contact TIG Advisors.
