The new year is only days away, and with it comes an increase in the amount of money that Social Security beneficiaries receive on a monthly basis.
The Social Security Administration makes an annual adjustment to the amount of money that Social Security recipients receive as a means to keep up with inflation. The adjustment for 2023 will be 8.7%, making payments to Social Security recipients 8.7% higher than what they have been receiving in 2022, according to the SSA.
“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, a Social Security and Medicare policy analyst at the Senior Citizens League, told CBS News.
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The average for retirement benefits in 2022 was $1,681 and will go up by $146 to $1,827 starting next year in response to this cost of living adjustment. The $146 comes from how it is 8.7% of $1,681, bringing the average retirement benefits total to $1,827 for next year.
Supplemental Security Income payments will also benefit from this increase in 2023, with January’s payment being made in advance on Dec. 30. The next SSI payment will be $914, up by 8.7% from the $841 that recipients received once a month in 2022.
This COLA will come at a bit of a cost, however, as the increased benefits may also lead to some recipients paying higher taxes. Single taxpayers who get more than $25,000 in retirement income and couples who receive $32,000 in retirement income would need to pay taxes, according to the SSA.
The increase could also affect seniors and their Medicare premiums if their income passes a certain threshold. Senior singles who make $97,000 or more a year would have to pay more for their Medicare premiums, ranging from $230 to $560 a month, while senior couples would have to pay more if they make $194,000 or more annually. Senior singles or couples who make less than those thresholds will pay the standard Medicare premium of $164.90.
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The 2023 COLA will mark the highest COLA in over 40 years since the SSA adjusted the benefits that recipients receive by 11.2% in 1981. The highest COLA made was made a year prior, in 1980, at 14.3%, and the only years when there was no COLA made were 2010, 2011, and 2016, according to the SSA.
