The cost-of-living adjustment for Social Security will increase by 8.7% in 2023, the most in 40 years. Social Security recipients will receive an 8.7% benefits boost in 2023, the most significant increase in 40 years, despite historically high inflation. The Administration announced the change on Thursday. Benefits will rise by an average of more than $140 per month beginning in January. The average monthly Social Security income for retirees will rise by $146 to $1,827 in 2023 from $1,681 in 2022.
The COLA might reach 8.7% next year, according to a prediction made by the Senior Citizens League, a nonpartisan senior organization, last month. The verified 8.7% increase in benefits surpasses the 5.9% increase that beneficiaries experienced in 2022, which was the most significant increase in four decades. The cost-of-living adjustment last increased by more than 1% in 1981, a year in which inflation was 11.2%. Beneficiaries have battled with rising prices this year, so next year’s record boost will be welcome news.
The potential size of your Social Security benefit
Beginning in January, beneficiaries can anticipate seeing the 2023 COLA in their benefit checks. But starting in December, you could see notices from the SSA online that detail the precise amount of your checks for the following year. Taxes and Medicare Part B premiums may influence the number of your benefit checks. Next year, the standard Medicare Part B premium will drop by $5.20 to $164.90 from $170.10. Those contributions are frequently taken out of recipients’ checks immediately. That can change if you have money deducted from your monthly checks for taxes. Take your net Social Security income, add your Medicare payment, then increase that amount by the 2023 COLA to get an idea of how much more money you might receive in the coming year.
How inflation is related to the COLA
About 70 million beneficiaries are affected by the COLA. Benefits may not always increase yearly. The two years after 2009 saw a record 5.8% growth and 0% gains. According to Johnson, a similar scenario might play out if the economy enters a recession. How a record-high rise can affect the money in Social Security. In June, the Social Security Board of Trustees stated that the trust funds for Social Security can continue to pay full benefits through 2035.
What might occur about future benefit increases?
Even if the COLA in 2023 is at an all-time high, beneficiaries should be ready for years in the future with lower increases. The amount of COLAs will decrease if inflation slows. Whether the CPI-W is the most accurate indicator of annual changes is debatable. Some claim that the Consumer Price Index for the Elderly (CPI-E) is a more precise indicator of the expenditures borne by seniors. The measure used to determine the CPI-annual E’s rises has been changed in numerous Democratic legislative measures. Others have recommended the Chained CPI as an additional strategy to reduce federal spending.