The Social Security Administration announced an 8.7% bump in benefits in 2023. You might be asking, “What does this mean?” Those receiving benefits can expect an 8.7% raise in pay next year. This is a big deal.
To put it in perspective, this is huge.
In the last two decades, the Social Security cost of living adjustment (COLA) was less than 3% (often times between 0%-2%) the majority of the time. We saw a large hike in 2021 of 5.9% and the current 8.7% increase is the highest increase we’ve seen in 40 years.
This equates to an average increase of more than $140 per month for those receiving benefits.
If you are currently receiving Social Security payments, be on the lookout for a notice from the Social Security Administration in December showing the dollar amount of your increase. Medicare premiums are actually going DOWN slightly next year, giving retirees a little more breathing room.
Not currently taking Social Security?
Don’t sweat it – the COLA increase is applied to your record, so you’ll get it either way. If you’re already full retirement age (FRA) and haven’t filed yet, you’ll get the normal 8% raise in benefits (until you file or reach age 70 and must file) plus this 8.7% raise for 2023. That means folks who are currently full retirement age that are not taking benefits will see a 16.7% total increase in benefits on their record in 2023.
Why is this happening?
Federal benefit rates increase when the cost of living (inflation) rises. This means that the cost of goods and services are higher, so this adjustment helps offset these costs.
Jamie Bosse, CFP®, RFC, CCFC is a lead financial planner with Aspyre Wealth Partners®. You can schedule a free consultation with Jamie by clicking this calendar link: https://go.oncehub.com/JamieBosse
Jamie A. Bosse is a Certified Financial Planner® professional at Aspyre Wealth Partners® and a board member of the Financial Planning Association of Greater Kansas City. For help with your specific situation contact Jamie at firstname.lastname@example.org
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