Social Security payouts will get an 8.7% cost-of-living increase beginning in January. The COLA reached an all-time high of 11.2% in 1981, marking the highest rise since then.
A poll found that 55% of retirees said the 2023 COLA should have been greater. However, not everyone believes the increase for the next year would be sufficient to combat continued inflation.
Increased Social Security Payments
They don’t stand alone. Seniors’ rights activists contend that the Consumer Price Index for Urban Wage Earners and Clerical Workers, the measure used to determine the yearly adjustment, is not a reliable indicator of their financial requirements.
The COLA for this year was 5.9%, breaking a record that had stood for 40 years. But during the 12 months that concluded in October 2022, the annual inflation rate was 7.7%.
Its highest point was 9.1% in June. According to the nonprofit Senior Citizens League, the 2022 COLA was 48% short through the month of August, which means that the typical beneficiary has been underpaid $417 for the whole year.
When to Receive Social Security Payments?
The age at which you begin receiving Social Security retirement payments has a significant impact on your COLA. Not everyone waits until they reach their full retirement age (FRA), which is presently 66 or 67, depending on when they were born. Your PIA and monthly payment may be equal if you wait until your FRA to apply for benefits.
The SSA does a separate formula to modify the PIA up or down for people who claim early or late, though, if you apply for benefits at a different age. Prior to their FRA, beneficiaries often receive reduced payouts, while those who wait until they are 70 receive the maximum sum.
Because the cost of Medicare Part B will decrease in 2023, you might occasionally receive a COLA that is larger than 8.7%. If you have already enrolled in Medicare, the premiums will be collected from your Social Security benefit in 2023 rather than 2022, resulting in a smaller deduction. As a result, your COLA may be more than 8.7%.
If you have already begun receiving Social Security benefits but intend to enroll in Medicare for the first time in 2023, your COLA may be less than 8.7%. Your monthly Social Security check may no longer include the Part B premium, which may reduce the 8.7% COLA.