Recipients of Social Security or those expecting to receive it in the next few years may receive a big raise. In 2023, the amount of the expected Social Security benefits increase is one of the largest in more than 40 years. Because costs are rising significantly for Americans, the Social Security Administration (SSA) is considering a 2023 cost-of-living adjustment (COLA).
We’ll explain the 2023 Social Security benefits increase and see how much recipients can expect their monthly payments to go up.
Will Social Security Benefits Increase in 2023?
Saying how much Social Security benefits will increase is difficult. The SSA sets the rate increase with the help of calculations using consumer prices. Since consumer prices keep rising, the benefits increase for 2023 is expected to be significant. Estimates from different sources put the anticipated rate increase between 9 and 10%. For comparison, the 2022 SSA COLA was 5.9%.
Remember, this is a percentage increase, not a set dollar amount. For example, if your current benefit is at the average Social Security check amount of $1,540, a 10% increase would make the new amount $1,694.
Because the 2022 increase was 5.9%, the 2023 increase is expected to be larger based on rising inflation. Consider the following range to get a better idea of how different % increases might increase your monthly benefit check:
|Monthly Benefit||6% Increase||8% Increase||10% Increase|
When Does the Social Security Administration Increase Benefits?
Inflation has been reported a lot in the news in the past year. Inflation is an increase in the cost of goods and services over time. The rate of inflation also decreases how much a dollar is worth.
In the U.S., the government aims to keep inflation around 3%. Yet, in June 2022, the U.S. inflation rate went up to 9.1%. The inflation levels we’ve seen in 2022 are some of the highest in decades. Put simply, this means you can buy less with the dollars in your bank account today than you could a year ago.
Instead of letting Social Security benefits decrease in value with inflation, the SSA issues COLAs each year. Keep in mind that the increase is based on a calculation of consumer prices.
Congress gave the ability for the SSA to issue cost-of-living increases in 1972. In 1975, they added legislation for automatic COLAs based on consumer prices. This was crucial to ensure that benefits wouldn’t go down because of inflation.
The adjustment of 5.9% we saw in 2022 was the most significant increase in over a decade. Suppose the consumer price index does get set in the 9-10% range, as many analysts predict. In that case, this will be the most significant increase since 1981.
How Do You Know If You’ll Get an Adjustment?
The SSA does reasonably well to keep beneficiaries up-to-date on COLA increases. These notices are sent to the Message Center of each Social Security account. You can also decide to receive these notices by USPS. Look for a decision on the adjustment percentage in October.
Also, remember that the SSA is taxpayer-funded, and help is free. Some shameful companies try to charge you or get your personal information, so be careful. It’s a good idea to not open suspicious emails, give out personal information, or provide payment to a party you are unsure about. You can always call the SSA directly and speak with a representative to get the needed help. You also have the option to talk to our estate planning attorneys about ways to preserve benefits, like using wills and trusts.
For more ideas on protecting yourself and your Social Security benefits, check out this guide from the SSA.
Potential Medicare Changes to Know
While we won’t spend too much time on it here, it’s essential to keep in mind that there are discussions around reducing 2023 Medicare Part B premiums. Social Security recipients who also get Medicare may potentially get two benefits. This comes in the form of an increase in their Social Security benefits and a reduction in Part B premiums. Of course, we’ll be monitoring this potential development carefully and making any course changes necessary to keep our clients’ plans on track.
Anticipating Benefit Changes Helps Chart the Right Path for Tomorrow
Our estate planning attorneys help our clients plan their ideal tomorrow by preparing for changes today. Our team closely monitors critical changes like the 2023 Social Security benefits increase. This helps us visualize the best path for preserving our client’s wishes and protecting future benefits. Contact us today to schedule a time for your no-obligation consultation.