Social Security: First Checks With 2023 Cola Increase Arrived This Week
The first Social Security checks reflecting the 2023 cost-of-living adjustment, or COLA, arrived on Tuesday. Benefits are being increased by 8.7% this year, the biggest bump in more than 40 years, to help fight ongoing inflation.
This first batch of checks is for long-time recipients and those who receive both Social Security and Supplemental Security Income. Other beneficiaries will receive their payments throughout January, depending on the day of the month they were born.
Read on to find out when your Social Security payment should arrive and how your payment date is determined.
What Is The Cost
In the 1970s, lawmakers put in place an automatic annual benefits increase for Social Security beneficiaries that boosts payments to keep up with inflation.
Prior to that, Congress had to authorize increases to keep up with inflation, which meant that sometimes several years would pass before seniors received a benefit increase.
What If I Receive Both Social Security And Ssi
If you received Social Security benefits before May 1997, or if you receive both Social Security and SSI, the payment schedule is different. Instead of getting your payments on a Wednesday, you’ll receive your Social Security payment on the third day of each month and your SSI on the first day of each month.
However, those payment dates change if the first or third day of the month falls on a weekend or a holiday. Jan. 1 falls on a Sunday this year, so SSI recipients received their January payments a day early on Dec. 30 and their Social Security payment on Tuesday, Jan. 3. Because of this calendar configuration, SSI beneficiaries won’t receive an SSI check in January.
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Social Security Recipients Finally Get Long Overdue 87% Raise
Many stacks of old silver dimes with social security card to illustrate trust fund
The Social Security Administration has given its recipients a 8.7% raise after four decades, and record high inflation. Retirees will see their monthly payments increase by $146, to an estimated average of $1,827 for 2023. When you consider the average annual SSA income received by African American men 65 years and older was $14,409 compared to $12,806 for African American women, this raise cant come soon enough.
Social Security 202: Latest Announcements And Info To Know Now
For that, they can thank an 8.7% cost-of-living adjustment designed to help seniors and other beneficiaries deal with a soaring inflation rate that is also the highest in 41 years. Heres a roundup of the latest announcements and other information you should know.
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I Havent Claimed Social Security Yet Have I Missed The Boat On Next Years Big Cola
Not if youre eligible for benefits.
The annual COLA is applied to your benefit amount, even if you have not yet claimed, beginning in the year that you become eligible to claim them . If you are considering delaying your claim to receive a higher monthly benefit down the road, missing out on COLAs should not be a factor that deters you.
You certainly should not claim early just to get the COLAs, Andrew Biggs, senior fellow at the American Enterprise Institute, said.
Why Is There So Much Interest In The Cola
Social Security is Americans only universal retirement benefit nearly all retirees receive it, so interest in the annual adjustment is always high. And the COLA is one of Social Securitys most valuable features because it holds benefits steady against the erosion of rising prices.
Inflation consistently surfaces in surveys as one of the top worries of retirees and the COLA sets Social Security apart from other retirement benefits. For example, private-sector pension plans generally do not have COLAs, although they are built into most state and local government pension plans.
And theres no cap, said Nancy Altman, president of the advocacy group Social Security Works. If inflation goes up 20 percent, you get a 20 percent increase.
Living costs and inflation rates vary considerably around the country, and that means a Social Security check goes farther in some regions than in others. The Elder Index shows that the average benefit covers 90 percent of living costs in rural West Virginia but just 38 percent in San Francisco.
Rising housing costs can be a major problem for seniors especially those who rent. Asking rents rose 12 percent nationally last year, and increases exceeded 20 percent in some regions of the West and South, according to the Joint Center for Housing Studies at Harvard.
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Social Security Payment Schedules Depend On Birthdays
Anyone whose birthday falls between the 1st and the 10th of a month can expect to get their money on the second Wednesday of each month.
Those whose birthday fall between the 11th and the 20th of the month can expect to receive their benefits on the third Wednesday of each month.
For anyone with a birthday that falls between the 21st and the 31st of the month can expect to get their payment on the fourth Wednesday of each month.
Social Security Administration Announced 59% Cola Increase In 2022
The Social Security Administration announced that more than 70 million American will receive a 5.9 percent increase in their Social Security benefits and Supplemental Security Income payments in 2022.
The 5.9 percent cost-of-living adjustment will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2022. Increased payments to approximately 8 million SSI beneficiaries will begin on December 30, 2021.
In December, the SSA will mail COLA notices to retirement, survivors, and disability beneficiaries, SSI recipients, and representative payees to be notified of the changes. Information about Medicare changes for 2022, when announced, will be available at www.medicare.gov.
The purpose of the COLA is to ensure that the purchasing power of Social Security and Supplemental Security Income benefits is not eroded by inflation. It is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers from the third quarter of the last year a COLA was determined to the third quarter of the current year. If there is no increase, there can be no COLA.
For more information about the SSA COLA announcement, please visit www.ssa.gov/cola.
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The Cola Will Have Tax Implications For Some Seniors
In some cases, the 8.7% increase in monthly Social Security payments will push seniors into income ranges where Social Security benefits become taxable. The federal tax code requires Social Security taxpayers to calculate their combined income, which is defined as their adjusted gross income, tax-exempt interest income and half of their Social Security benefits.
Those who earn a combined income of less than $25,000 a year for single filers or $32,000 for joint filers pay no tax on their Social Security benefits. Taxpayers earning between those thresholds and up to $34,000 for single filers or $44,000 for joint filers pay tax on up to 50% of their benefits. Above those levels, up to 85% of Social Security benefits are taxed.
Because of the high COLA in 2023, many Social Security beneficiaries who dont pay income taxes now might be pushed into income levels where they are taxed. Others might face higher tax rates.
Increase In Payments For Seniors And Other Americans Reflects Surging Inflation During Pandemic
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Seniors and other Americans receiving Social Security benefits in 2022 will see the largest increase in their payments in four decades, reflecting surging inflation during the pandemic.
Next years cost-of-living adjustment, or COLA, will be 5.9%, the Social Security Administration said Wednesday. The increase will translate to an addition of $92 to retirees average monthly benefit next year, bringing the amount to $1,657, the agency estimates.
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Learn More About The Cola For Ssdi In 2022
What is the COLA for SSDI for 2022? The SSA issued a 5.9% COLA for 2022 to address concerns regarding rising inflation. You can learn more about how this increase impacts you with our team at Farmer & Morris Law, PLLC.
You can learn more about SSDI benefits, COLA increases, and more with our team at Farmer & Morris Law, PLLC. Complete our online contact form to get started.
When Are Bigger Social Security Checks Coming
The first batch of Social Security checks with the new COLA should arrive on Tuesday, Jan. 3, according to the SSAs payments schedule for 2023. These payments will be sent to people who receive both Social Security and Supplemental Security Income and people who have received Social Security since before May 1997.
Other Social Security recipients will have to wait a little longer to receive their freshly boosted payments. In general, the Social Security payments are distributed based on your date of birth:
If your birthday falls between the 1st and 10th days of the month, you can expect your payment to be sent out on the second Wednesday of each month. So the first check would come on Jan. 11 in 2023.
Social Security payments for those with birthdays falling between the 11th and the 20th are sent on the third Wednesday of the month. So: Jan. 18 in 2023.
Payments for those with birthdays falling between the 21st and 31st are sent on the fourth Wednesday of the month. So: Jan. 25 in 2023.
As for SSI payments, they are typically sent out on the first of the month, with a few exceptions. The first round of larger payments to SSI recipients was sent out at the end of December.
How Much Will The Cola Amount Be For 2023 And When Will I Receive It
How much is the increase: Social Security benefits and Supplemental Security Income payments for approximately 70 million Americans will increase by 8.7% in 2023. This is the annual cost-of-living adjustment . By law, federal benefits increase when the cost of living rises, as measured by the Department of Labors Consumer Price Index for Urban Wage Earners and Clerical Workers .
When the increase takes effect: The increase will begin with benefits that Social Security beneficiaries receive in January 2023. Increased SSI payments will begin on December 30, 2022.
When your notice will arrive in the mail: We mail COLA notices throughout the entire month of December. It is possible that your friend or family member will receive their notice in the mail before you. Please wait until January before contacting us about your mailed notice. However, you may not need to wait for your mailed notice to learn your new benefit amount for 2023: you can view your COLA notice online with your personal mySocial Security account starting in early December.
Who can see their notice online: COLA notices are available online to most beneficiaries through the Message Center of their personal mySocial Security account if they created their account by November 15, 2022. mySocial Security is a secure, convenient way to receive COLA notices online and save the message for later. You can also opt out of receiving notices by mail that are available online.
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Social Security Updates To Know For November 2022
The Social Security Administration recently posted a November 2022 update on its website, with much of the focus on the 8.7% cost-of-living adjustment that will boost Social Security and Supplemental Security Income payments in 2023.
In its update, the SSA said it will mail COLA notices throughout the month of December to retirement, survivors and disability beneficiaries, SSI recipients and representative payees. On average, Social Security benefit payments will increase by more than $140 a month starting in January. About 70 million Americans will get the higher payment.
Recipients who want to know their new benefit payment amount sooner can get their Social Security COLA notices online using the Message Center in their personal my Social Security account. The online information will be available in early December, prior to the arrival of mailed notices. Because Social Security customers can get the COLA notice online or in the mail, the SSA advises against contacting the agency to get the new benefit amount.
Other 2023 changes include an increase in the maximum amount of earnings subject to Social Security payroll tax and a change in the retirement earnings test exempt amount. For more information, check the COLA fact sheet, located here, on the Social Security Administration website.
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How About Prescription Drug Costs Under Medicare They Eat Into Social Security Benefits
Most seniors prescription drugs are covered through Medicare Part D, and that program has not had a cap on the amounts that beneficiaries must pay out of pocket after deductibles are met. That can be a hardship for older people with very high drug costs. In 2020, 1.4 million Part D enrollees spent $2,000 or more out of pocket on drugs, according to the Kaiser Family Foundation.
The climate and health care bill that President Biden signed into law in August aims to start curbing those costs with a series of changes that will start phasing in next year.
In 2023, the Inflation Reduction Act curbs the soaring cost of insulin with a $35 monthly cap for Medicare enrollees. Also starting next year, drug makers will pay penalties for any price increase on a drug that exceeds the rate of general inflation.
The legislation takes a two-stage approach to capping total out-of-pocket costs. In 2024, Medicares requirement that enrollees pay 5 percent coinsurance above the Part D catastrophic threshold will be eliminated. That will provide important relief to retirees who now pay 5 percent of the cost of very expensive drugs for conditions such as cancer, diabetes, rheumatoid arthritis and atrial fibrillation. And starting in 2025, a $2,000 total out-of-pocket cap takes effect.
The large COLA, an 8.7 percent increase that begins in January, will push some retirees over income thresholds that require them to pay income taxes on part of their Social Security benefit.
The Extra Padding To Social Security’s 87% Cola In 2023
Fortunately, inflation is trending downward. As the chart in the previous section illustrates, the CPI-W has decelerated for the last five consecutive months, and the Federal Reserve is working to keep that trend in motion by shrinking its balance sheet and raising its benchmark interest rate.
Assuming the CPI-W continues to slow, the 8.7% COLA in 2023 will actually overestimate the impact of inflation, restoring a portion of the buying power Social Security benefits lost in 2022. That means retired workers may wind up with a little extra cash this year, which would be a nice change of pace after battling rising prices over the past year.
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Cola And Retirement Benefits In 2022
The COLA impacts more than just SSDI. Individuals who receive retirement benefits through the Social Security Administration will also see their monthly payments increase. The SSA uses the same COLA for individuals receiving retirement benefits.
Retired workers do not all receive the same benefits every month. However, the maximum payment may reach $4,124 in 2022. Individuals who receive the maximum amount of benefits for their retirement could receive $49,497 throughout the entirety of 2022.
What Happened To Interest Rates In 2022
At the last meeting of the Federal Reserve in December 2022, the key interest rate was increased by 0.5 percentage points to a target range of 4.25% to 4.50%, the highest since late 2007 during the banking crisis.
“If you think about where we’ve been over the last two decades, we haven’t had high inflation, we’ve had low rates. We’re now moving into a very different time,” Esther George, KC Federal Reserve president and CEO, says.
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Does The Cola Accurately Reflect The Inflation That’s Impacting Seniors
Some advocates say that it is falling behind, partly because the formula used by the Social Security Administration relies on an inflation measure called the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.
Some seniors and their advocates have argued that the CPI-W doesn’t accurately reflect the price pressures facing older Americans.
The CPI-W gives greater weight to gasoline and transportation costs, which are expenditures more common among workers who commute than retirees. It also puts less weight on medical costs, which are typically higher for older Americans.
How The Ssa Determines Cola Increases
COLA increases vary from year to year. For example, in 2021 there was only an increase of 1.3% through the COLA system. The SSA bases COLA changes on fluctuations in the Consumer Price Index . Generally, the agency looks at statistics from the previous years third quarter into the current years third quarter.
The information in the CPI-W comes from the Bureau of Labor Statistics . This Bureau operates as part of the Department of Labor.
Inflation rates have remained high over the past several years. Many experts attribute spiking inflation to the continued effects of the coronavirus on the economy. Rising inflation increases the costs of groceries and other items.
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