Every year about this time, the Social Security Administration (SSA) announces the new cost-of-living adjustment (COLA) for those receiving Social Security benefits. Seniors everywhere look forward to the announcement, wondering if it will be enough to offset the current and projected inflation rate.
The 2023 COLA RaiseWhen the new Social Security benefits COLA 2023 is to be determined, it is based on the inflation rate during the third quarter—July through September. The SSA says the inflation rate comes from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index is recalculated each month.
When Will the Raise Come?The new COLA payments start in December 2023. It means you will see an increase in your January 2024 Social Security payment.
How Much to Expect on Your January CheckThe average person getting Social Security payments will receive an average of about $58 more starting in January. CNET reports that workers with disabilities can expect about $47 more; a senior couple where both get Social Security benefits will get about $95 more; a widow(er) will get about $55 more; and a widow(er) with two children will receive an average of $113 more.
The Maximum Taxable Earnings for Social SecurityWhen you earn more than a specified amount of money and receive Social Security benefits, you get taxed on some of those benefits. The SSA says that retirees who have not yet reached their full retirement age, but earn more than $22,320, will have their benefits reduced by $1 for every $2 earned over the limit.
Supplemental Security Income BenefitsPeople who receive Supplemental Security Income (SSI) benefits will also get a COLA increase of 3.2 percent. CNET mentions that people getting SSI benefits will receive their first benefit at the end of December of this year. Since the first of the year falls on a holiday, your payment is sent earlier.
The COLA May Not Be EnoughMany seniors living only on Social Security have difficulty making ends meet, even though there was a significant COLA increase this year. Gas and food costs have risen considerably and are not likely to come back down. CNBC reports that taxes may consume the additional amount for some people.
Increased Medicare CostsOne expense that decreases the COLA benefit is the cost increase of Medicare premiums for Part B. The Federal Register indicates that the new rate for Medicare Part B will be $174.70, which is $9.80 higher than in 2023. It is a 6 percent increase. Since Medicare premiums are removed before being sent, seniors will likely never notice it.
Possible Reduced Social Security Benefits in the FutureEven though Social Security can pay a COLA now, it is questionable what they might do in the not-too-distant future. An annual report released by the Social Security and Medicare trustees in March 2023 says that Social Security retirement benefits could be reduced to 77 percent of the regular benefit amount.
The Maximum Social Security BenefitAt full retirement age, there is a maximum benefit that an individual can receive. For 2023, the SSA reports that the maximum benefit for an individual is $3,627 per month. It has been raised to $3,822 for 2024, which is $195 more.
The Social Security benefits increase helps many seniors and those getting SSI benefits to meet their financial demands for the year. Seniors having a difficult time financially should talk to their Social Security Administration’s office near you to determine if there are more benefits you could receive. State and local programs may also provide some help.