Social Security Update: The 2023 Cost-of-Living Adjustment (COLA)
If you’re one of the approximately 70 million retired Americans collecting Social Security benefits, you’ll see an 8.7% Cost-of-Living Adjustment (COLA) increase in 2023. Supplemental Security Income (SSI) beneficiaries will see increased payments starting December 30th, 2022.
The taxable maximum, or maximum amount of earnings subject to the Social Security tax, is also increasing. In 2023, the new maximum will be $160,200.
If you receive benefits, you’ll receive a notification of the new amounts either by mail or online through my Social Security in December. You can also sign up for text or email notifications for new messages from Social Security, rather than waiting for a letter in the mail.
The goal of the COLA is to help Social Security and SSI keep up with inflation. Increases are based on percentage increases in the Consumer Price Index, but this is the largest increase in 41 years.
Social Security Basics
Even if retirement is a few years away, you can still benefit from the resources and information provided by the Social Security Administration. Understanding how you benefit may help you as you plan your retirement finances. If you still have questions about Social Security, here are a few facts to consider:
- Social Security is more than just retirement income. It also provides life insurance, spousal, and survivor benefits, and there are multiple filing strategies that can affect the size of your benefit.
- The amount of Social Security you receive depends on your lifetime work credits. You’ll need a total of 40 lifetime credits to collect benefits. The most you can earn per year is four, meaning you will have to work for at least 10 years to start collecting benefits.
- Your full retirement age (FRA) varies based on your birth year. People born in 1954 or earlier can start collecting at 66, whereas people born in 1960 or later can start at 67.
- You can start receiving Social Security as early as 62, but you’ll receive reduced benefits. The reduction depends on how many months away you are from retirement age. The Social Security Administration has a benefits planner that estimates what your reduced benefit percentage could be.
- In contrast, waiting to collect benefits can increase your monthly benefit, particularly if you wait until 70.
- When you’re ready to apply, you can complete an easy online application. You can apply for Social Security and Medicare separately if desired.
Social Security planning can be very complex, so it may be wise to consult a professional who can help you determine the best strategy to maximize your benefits.
Want help? Reach out to our office to schedule a free initial strategy session with an experienced Social Security consultant who will be happy to review your situation and provide recommendations.
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