Social Security COLA 2023: What to expect in 2023
Social Security beneficiaries will see an 8.7% increase in their benefits in 2023, thanks to a cost-of-living adjustment (COLA). The increase is a welcome relief after record-high inflation sent prices surging for gas, food, and housing in 2022.
Nearly 70 million Americans receive Social Security benefits, and according to Gallup, 90% of them — a whopping 63 million people — say the monthly checks are an important source of income for them.
What does the increase mean for you? And when will you see it reflected in your benefits? Keep reading to find out what to expect for Social Security COLA 2023.
How much is Social Security COLA 2023?
Due to the record inflation over the past year, there was no question about whether or not Social Security would increase benefits. The question was, how much would the COLA be? Early reports suggested a historic increase that could claim the title of the highest COLA on record.
Retirees have been anxiously waiting to hear news about the change. The diminished purchasing power and increased lifestyle expenses we’ve all experienced have been a heavy financial burden for older Americans.
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The Social Security Administration (SSA) announced an 8.7% increase for the COLA on October 13, 2022. Considering the COLA is typically 1% to 3% each year, this is a significant jump. It’s one of the biggest raises in recent memory, and the largest increase in 40 years.
How much will your Social Security check be?
The average Social Security benefit for retirees is $1,681 in 2022. Add in the 8.7% increase, and the average retiree will receive $1,827 per month in 2023 — $146 more, according to the SSA.
The 2023 COLA doesn’t go into effect until January 2023, but you will likely receive a notice from the SSA in December about your benefit amount. The notice should let you know what next year’s checks will be, so you’ll have a better idea of how much to expect in the new year.
Keep in mind that Medicare Part B premiums and taxes can affect the amount of your benefit checks. The good news is that you’ll pay less in premiums next year. The cost of Medicare Part B is dropping $5.20 in 2023 to $164.90 from $170.10. However, you could pay more in taxes if your income is over $25,000 ($32,000 for married couples).
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Who is eligible for the Social Security COLA?
You don’t need to submit a special request to receive the cost-of-living adjustment. If you receive Social Security benefits, you are eligible for the Social Security COLA, and you’ll automatically receive the increase when it goes into effect.
The increase “will provide much needed relief to millions of Americans,” said AARP Chief Executive Officer Jo Ann Jenkins in an AARP article.
The increase in benefits helps to offset the rising cost of consumer goods and services and will be a welcome reprieve for many retirees. Despite the automatic adjustment, however, you shouldn’t expect to have much leftover money at the end of each month.
