Social Security Announces Large COLA Increase for 2023

Social Security Announces Large COLA Increase for 2023

The Social Security Administration recently announced that benefits for retirees will increase by 8.7% beginning in 2023. This is the largest single year COLA increase in over 40 years. The increase is a direct result of the high inflation Americans have faced as a result of the Covid-19 pandemic and various other factors.

This is welcome news to Social Security beneficiaries as it will help offset increasing costs in housing, food, transportation, and other goods and services. Additionally, Medicare Part B premiums are decreasing in 2023, which should provide additional relief for retirees.

The Social Security also announced several other updates related to benefits for 2023:

• The maximum earnings subject to Social Security payroll taxes will increase to $160,200 (currently $147,000).
• The earnings limit for earlier filers who continue working will increase to $21,240 in 2023. Recipients who take benefits early and earn above this limit will have $1 withheld for every $2 of earnings above the limit.
• The earnings limit for earlier filers increases to $56,530 in the year they reach their Full Retirement Age (FRA). Any wages exceeding this amount will see a $1 withholding for every $3 earned above the limit. The earnings limit stops once an individual reaches their FRA.

For individuals who are eligible for benefits but have not yet filed for Social Security benefits, this poses an important question. Will they benefit from this increase? The answer is yes! Once an individual turns age 62, their Social Security benefits will increase with each year’s COLA increase. Thus, there is no immediate need to file for benefits just to receive this upcoming increase.

Every individual’s income needs are unique and the timing of when to start Social Security benefits can vary. If you have questions about this recent announcement or Social Security in general, please don’t hesitate to contact us!

Click below to read the Social Security’s press release:

https://www.ssa.gov/news/press/releases/2022/#10-2022-2