In 2023, those receiving Social Security can expect a significant increase in their benefit payments. The growth is one of the largest in more than 40 years. Costs are rising across the board for Americans, which is why the Social Security Administration (SSA) is planning this 2023 cost-of-living adjustment (COLA).
Here, we’ll look at how much of an increase those receiving benefits can expect and what that means going forward.
How Much Will Social Security Benefits Increase?
How much Social Security and Supplemental Security Income benefits will increase is hard to say. The SSA sets the rate increase based on calculations using consumer prices. Since consumer prices have significantly risen in recent years, the benefits increase should also be significant. Estimates from different sources put the expected rate increase around 9-10%. To compare, for 2022, the SSA issued an adjustment of 5.9%.
Remember, this is a percentage increase rather than a set dollar amount. For example, if your current benefit is around the average Social Security check amount of $1,540, a 10% increase would make the new amount $1,694.
Since the 2022 increase was 5.9%, it is almost certain that the 2023 increase will be more considerable based on the data. Let’s look at a range of examples to help you understand how different increases might affect your monthly benefit amount:
|Monthly Benefit||7% Increase||8.5% Increase||10% Increase|
Why the Social Security Administration Increases Benefits
Inflation is a no-fun word that most have heard many times over the past several years. Inflation is an increase in the prices of products and services over time. The rate of inflation also lessens how much each dollar is worth.
The government tries to keep inflation around 3%. However, in June 2022, the U.S. inflation rate skyrocketed to 9.1%. The inflation levels in 2022 have been at some of the highest seen in decades. Simply put, this means you can buy less with the dollar in your wallet today than you could at this same time last year.
Instead of letting Social Security benefits go down in value with inflation, the SSA pretty much sets COLAs each year. As we mentioned above, the increase is based on a calculation of consumer prices.
In 1972, Congress added the ability for the SSA to issue cost-of-living increases. By 1975, legislation was added to make these increases automatic based on consumer prices. Taking this step was necessary to make sure that benefits wouldn’t be decreased because of inflation.
The 2022 increase of 5.9% was the most significant in over a decade. Suppose the consumer price index shows the need for an increase of around 9-10%, as many analysts predict. In that case, it will be the most significant increase since 1981.
How Do You Find Your COLA Notice?
The SSA is fairly good at keeping beneficiaries informed about COLA increases. These notices can be accessed in the Message Center of their Social Security account. You can also select to receive these notices by mail. The percentage for the adjustment will be decided in October, based on the data.
It is important to note that any help you may need from the SSA is free. Companies out there may try to charge you or gain your personal information, so be careful. Never open a suspicious email, reveal personal data, or send payment to a party you are unsure about. Instead, you can call the SSA directly and speak with a representative who can get you the help you need. You can also talk to a Will Gurus estate planning attorney about the many options for preserving your benefits, such as through wills and trusts.
You can check out this guide from the SSA for more ways to help protect yourself and safeguard your Social Security account.
Other Important Changes to Know
While we won’t spend too much time here, it’s important to know that there are discussions around reducing 2023 Medicare Part B premiums. Social Security recipients who also receive Medicare may see a rise in Social Security benefits and a drop in Part B premiums. Of course, we’ll be carefully observing this potential development.
Understanding Benefit Changes Helps Chart the Right Path for Tomorrow
At Will Gurus, we help our clients envision their tomorrow by anticipating changes today. Our team of estate planning attorneys keeps a close eye on changes like the 2023 Social Security benefits increase. This helps us plan the best path to preserve your vision, protect future benefits, and ensure your wishes are always put first.
Contact us today to schedule your free, no-obligation consultation.