HomeNewsWill There Be An Increase In Social Security

Will There Be An Increase In Social Security

When Will I See The Increase In My Social Security Check

Social Security payments get biggest raise in over 40 years

The annual increase goes into effect with December benefits, which appear in checks dated January 2023.

Social Security payments follow a rollout schedule based on the beneficiary’s birth date: If you were born from the first day through the 10th day of the month, your benefits are paid on the second Wednesday of the month.If your birthday falls between the 11th and 20th, your check is paid on the third Wednesday, so you’ll see your first COLA increase on Jan. 18, 2023.

Retirees born between the 21st and the last day of the month receive benefits on the fourth Wednesday. In that instance, your first increase would appear on Jan. 25, 2023.

Beneficiaries should then receive letters detailing their specific benefit rate in December. You can also check your rate on the My Social Security website.

Get the So Money by CNET newsletter

Why Are Social Security Benefits Adjusted Due To Inflation

In 1973, the Social Security Administration tied benefits to a price index known as the Consumer Price Index for Urban Wage Earners and Clerical Workers . Every year, the Social Security Administration uses this index to adjust the value of benefits.

Benefits represent about 30% of retirement income for all seniors, so the adjustment ensures that the value of the benefits does not diminish with inflation. And of course, since most people don’t receive a significant amount of retirement income from Social Security benefits, you should try to save for retirement independently through an employer-sponsored 401 or an individual retirement account .

  • Offers free financial planning for college planning, retirement and homebuying

Terms apply.

Social Security benefits are funded through payroll tax deductions which are split between the employee and employer. The total payroll tax for Social Security is 12.4%, so workers and employers each pay 6.2%. The payroll tax only applies up to a certain income threshold.

The Social Security Administration adjusts the income threshold each year in response to changes in wages. For 2023, the payroll tax applies to up to $160,200 of an individual’s salary, up from $147,000, from the previous year.

More Help For Children Of Deceased Workers

Some people may not be aware that Social Security provides benefits to children of disabled or deceased workers if they are full-time students.

The legislation would raise the eligibility age for students to collect benefits to 22, provided the individual is a full-time student in college or a vocational school. Currently, the program ends for children of disabled or deceased workers when they turn 19 years old or before that age if they are no longer a full-time student.

The lawmakers say extending this benefit would help ensure that the children of deceased or disabled parents can continue their education beyond high school.

Also Check: When Are Social Security Benefits Taxable

Medicare Premiums See A Rare Decrease

Senior citizens will also see their Medicare Part B premiums drop in 2023, the first time in more than a decade that the tab will be lower than the year before, the Centers for Medicare and Medicaid Services announced last month.

Its only the fourth time that premiums are set to decline since Medicare was created in 1965.

This is a once-in-a-retirement event, said Johnson. We have a historically high COLA, and at the same time, Part B premiums are going down next year.

The standard monthly premiums will be $164.90 in 2023, a decrease of $5.20 from 2022.

The reduction comes after a large spike in 2022 premiums, which raised the standard monthly premium to $170.10, up from $148.50 in 2021.

A key driver of the 2022 hike was a projected jump in spending due to a costly new drug for Alzheimers disease, Aduhelm. However, since then, Aduhelms manufacturer cut the price and CMS limited coverage of the drug.

Also, spending was lower than projected on other Part B items and services, which resulted in much larger reserves in the Part B trust fund, allowing the agency to limit future premium increases.

The combination of the large Social Security adjustment and the reduction in Medicare premiums for 2023 will give seniors more peace of mind and breathing room, said Kilolo Kijakazi, acting commissioner of the Social Security Administration.

Social Security Cola Increase For 2023

Social Security Benefits Increase!

TheSocial Security cost-of-living adjustment for 2023 will be the largest increase that Social Security beneficiaries have seen in roughly 40 years. Benefit recipients will see an 8.7% increase in their benefits in 2023. The reason for the large increase is because of high inflation. Remember that the COLA increase is tied to the consumer price index. The larger the increase in the cost of goods and services, the larger the increase in Social Security benefits will be.

Even though a larger check sounds great, there is something that you need to remember. This increase in benefits is not really like getting a raise. The cost-of-living increase is necessary for beneficiaries to maintain their current financial position. Without the increase, beneficiaries would see a decrease in their standard of living due to the increased cost of goods. The increase in benefits is simply an attempt to help them maintain the status quo.

In addition to the increase in Social Security payments, 2023 will surprisingly see a decrease in Medicare Part B premiums. If you are enrolled in Medicare Part B, you can expect a reduction of just over $5 in your monthly premium. The standard premium will drop from $170.10 to $164.90 per month. Since many people have their premiums automatically deducted from their Social Security check, this decrease in the premium will also lead to a slightly larger monthly check.

Read Also: Stockton Social Security Office Stockton Ca

Social Security’s Record Increase Starts Next Month Here’s How Much You’ll Get

The 2023 Cost of Living Adjustment is 8.7%, the biggest boost to benefits in over 40 years.

Beginning in January, retirees will see a healthy increase in their monthly Social Security checks: Benefits are increasing , based on a cost-of-living adjustment, or COLA, announced in October. That’s the largest hike since the all-time record of 11.2%, back in 1981.

“A COLA of 8.7% is extremely rare and would be the highest ever received by most Social Security beneficiaries alive today,” Senior Citizens League policy analyst Mary Johnson said in a statement earlier this year. In fact, the COLA has only risen above 7% five times since it was introduced in 1975. The 2022 COLA, in comparison, was only 5.9%.

Next year’s increase represents the agency’s attempt to keep up with ongoing inflation. The adjustment is determined annually by shifts in the Consumer Price Index, which charts year-over-year price fluctuations for goods and services.Read on to learn all about 2023 Social Security benefits, including how much more you’ll be getting next year and when the increase will appear in your check.

For more on Social Security, learn how to access your payments online and how benefits are calculated.

Why Did I Get Two Social Security Checks This Month

If youre owed back payments, you could get two checks, according to GOBankingRates, a personal finance website. Also, if you receive either retirement or disability benefits, as well as Supplemental Security Income, or SSI, because your income is below certain thresholds, you also could receive two payments.

You May Like: The 1-800 Number To Social Security

Would Those Changes Fix The Program’s Funding Shortfall

Expanding the payroll tax would boost the Social Security Administration’s trust fund, ensuring its solvency through 2096, according to DeFazio.

Whether this bill moves forward or not, boosting payroll taxes in some fashion is viewed as a way to guarantee that current and future retirees don’t lose benefits after 2035.

For instance, the Congressional Research Service said in a 2021 report that “raising or eliminating the cap on wages that are subject to taxes could reduce the long-range deficit in the Social Security trust funds.”

Gas Prices Fall Below $4 But Housing Food Prices Continue To Climb

Changes to 2023 Social Security Payments

The annual adjustment is calculated by averaging inflation readings among urban wage earners and clerical workers from July, August and September. Annual inflation readings in those months came in at approximately 8.5%, 8.3%, and 8.2%.

Thanks to an unusual quirk, Social Security beneficiaries can expect to realize the full cost of living adjustment increase. In previous years, the annual adjustment was eaten up by increases in the cost of Medicare Part B, the unit of Medicare that pays for doctor and hospital outpatient services.

But Medicare premiums are set to stay flat or even decrease going into 2023 because of a large increase last year tied to a new calculation in the cost of an Alzheimers treatment.

Don’t Miss: Wood County Social Security Office

Biggest Social Security Cost

How are Social Security cost of living adjustments calculated?

The adjustments are based on data relating to inflation.

The Social Security Administration is expected to announce this week the largest inflation adjustment to benefits in over 40 years.

Roughly 70 million Americans, including retirees, those who are disabled, widowers, and others, are likely to see an 8.7% cost-of-living adjustment in 2023, according to recent estimates.

These cost-of-living adjustments have been in place since 1975 as a way to adequately keep pace with inflation. The COLAs are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers from the third quarter of the previous year to the corresponding quarter of the current year, according to the Social Security Administration.

Beneficiaries can expect the final COLA to be released on Thursday following the release of the inflation figures for September, according to the Senior Citizens League, a group that lobbies for older adults.

An 8.7%-boost would be the highest COLA increase since 1981 when the inflation adjustment was 11.2%.

For the average retiree who got a monthly check of $1,656 this year, an adjustment of 8.7% would boost the payment by $144.10, the Senior Citizens League said.

FILE – In this photo illustration, a Social Security card sits alongside checks from the U.S. Treasury on Oct. 14, 2021, in Washington, D.C.

RELATED: 1 in 5 Americans dating less because of inflation

What causes inflation?

Social Security Benefits: Payment Dates

The January check next year will be based on recipients’ birth dates, according to the Social Security Administration.

  • For people whose birthday falls between the 1st to 10th of any month, their payments arrive on the second Wednesday of the month. That means the first check with the 2023 COLA will land on January 11.
  • Those with birthdays that fall between the 11th to 20th of any month will have their payments deposited or mailed on the third Wednesday of each month. Their first check with the enhanced COLA will arrive on January 18.
  • If a recipient’s birthday falls between the 21st and 31st, their payments are scheduled for the fourth Wednesday of each month. Their first 2023 COLA will arrive on January 25.

Read Also: Social Security Disability Payment Schedule

Social Security Cola 2023 Increase: Here’s When You’ll Get Your 87% Benefit Hike

Seniors and millions of other Social Security recipients in the U.S. will soon get their biggest benefit hike since 1981, with the pension program set to deliver an 8.7% cost-of-living increase in 2023.

The annual cost-of-living adjustment, or COLA takes effect with the December benefits, but those payments will be made in January 2023, according to the Social Security Administration. With the increase, the average benefit check will rise more than $140 to $1,827 a month, compared with the typical benefit of $1,681 in 2022.

The Social Security Administration adjusts payments annually based on the inflation rate, which this year has spiked to its highest levels in four decades. Seniors lost purchasing power during this year since the 5.9% they received in 2022 is well below this year’s rise in prices. About 4 in 10 seniors said they drained their emergency savings to stay afloat this year, according to an October survey by the advocacy group the Senior Citizens League.

“Anytime they go through a loss of buying power, that means they are exhausting other retirement resources, like savings, or may be putting more on credit cards or they might turn to safety net programs,” said Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League.

Social Security Cola 202: When Will My Benefits Increase Begin

Should You Delay Applying For Social Security Past Age 70?

This week, the Social Security Administration announced the biggest payment increase for the program in decades. Every year since 1975, the SSA has instituted a cost-of-living adjustment after analyzing rates of inflation to see how much to increase beneficiary amounts to help recipients keep up with the cost of goods.

Next: 5 Things You Must Do When Your Savings Reach $50,000

The latest COLA is a record 8.7% bump, taking into account the rampant rates of inflation that have been affecting Americans all year. As noted by CBS, the last time Social Security saw this kind of increase was back in 1981 when the SSA announced a COLA of 11.2%.

The news of the 2023 payment increase comes as a relief to the many seniors and other beneficiaries of Social Security who have been struggling to pay bills and buy groceries as prices keep rising.

According to the latest Consumer Price Index report , the cost of food is up 11.2% over this time last year while utilities like electric and piped gas are up 19.8% and the cost of housing is up 6.6%.

With the payment increase in 2023, Forbes said 8.7% more will equate to an average added monthly benefit of $144 for individuals and $240 extra for couples filing jointly. But the biggest question on many peoples minds is: When will these increases start being reflected in monthly payments?

Take Our Poll: How Do You Typically Split the Restaurant Bill?

Medicare premium decreases will also take effect in January 2023.

More From GOBankingRates

Don’t Miss: Social Security Office Orangeburg Sc

How To Apply For Disability

People who cant work because of a medical condition thats expected to last at least a year or result in death are eligible for Social Security Disability Insurance benefits as long as theyve worked long enough, SSA says. Once a disability begins, a worker must wait five months before receiving benefits.

You can apply for benefits online or by calling 800-772-1213. SSA will send your application to a state agency that makes the decision based on information provided by your doctors. Seventy percent of applicants are denied in their initial application, according to Disability Benefits Help, a group that provides information to applicants and those rejected.

Understanding your statement:What your Social Security benefits statement tells you, and what it doesn’t

But denials can be appealed and the success rate for appeals is much higher, according to Disability Benefits Help. Many people hire lawyers to help with their appeals.

People with disabilities can also receive benefits under the Supplemental Security Income program, which is based on financial need.

Contributing: Robert Powell and Elisabeth Buchwald

A Few Years Had Such Sizable Gains

The inflation adjustment for Social Security benefits was very high at 5.9% in 2022. The cost-of-living adjustment began with benefits payable to more than 64 million Social Security beneficiaries in January 2022.

But you’d have to go back to 1979, 1980 and 1981 for any inflation adjustment that would be 9% or higher. The highest COLA was 14.3% in 1980.

Johnson said the deepest impact of inflation has been felt by those older adults who aren’t bringing home any paycheck, even a small one as well as seniors who don’t have a pension or any savings.

“Every COLA is meaningful,” Johnson told the Free Press, “because Social Security is one of the only forms of retirement income that is adjusted for inflation.”

If you need about 10% more money now, for example, to buy the exact same groceries and other goods you bought a year ago, you’re going to drain whatever savings you have much faster.

While you can trim some spending by turning to generic brands, eating less meat or going out for lunch less often, everything we buy isn’t discretionary and cannot be scratched off a shopping list.

Inflation was high last year and it soared even more so far in 2022. July did show improvement when the month-to-month change was flat, reflecting in part a 7.7% decline in gasoline prices in the month.

Retirees couldn’t keep up with inflation this year, though, as many pensions aren’t adjusted for inflation and many retirees do not have pensions at all.

Every extra dollar counts in retirement.

You May Like: Does Social Security Count As Income For Extra Help

How Big Will The Raise Be For Social Security In 2023

How big will the Social Security Raise be in 2023? WASHINGTON, DC – MARCH 12: Former U.S. Vice … president Joe Biden speaks at the International Association of Fire Fighters legislative conference March 12, 2019 in Washington, DC. The conference addresses issues including firefighter mental health, funding the 9/11 Victims Compensation Fund and collective bargaining.

Getty Images

The pain of high inflation is often harshest on the fixed income budgets of current retirees. The only bright light of the relatively recent sky-high spike in inflation is the potential for a huge Social Security cost-of-living adjustment in 2023. Estimates of the Social Security COLA in 2022 have been in the range of 8.6 to 10.5%. We have not seen a cost-of-living adjustment at this level since 2009.

The 2022 Social Security cost-of-living adjustment will not kick in until January 2023. So, retirees will likely continue to see their retirement incomes stretched thin over the next six months. The prices of everything you can’t live without seems to be going up from, Mortgage rates or rent, food and even healthcare.

Update: Today the Social Security Administration announced that the Social Security Cost Of Living Adjustment for 2023 will be a whopping 8.7%.

Must Read