Social Security benefits and Supplemental Security Income (SSI) payments for almost 70 million Americans would increase by 8.7% in 2023. Starting in January, Social Security payments will rise by more than $140 a month on average.
When the cost of living rises, as measured by the Consumer Price Index maintained by the Department of Labor, federal benefit rates climb (CPI-W). When inflation rises, the CPI-W also rises, raising the cost of living. The result of this adjustment is an increase in average pricing for products and businesses. These expenditures are somewhat compensated by the cost-of-living adjustment (COLA).
To recipients of retirement, bereavement, and disability benefits, as well as SSI recipients and representative payees, we will mail COLA notices throughout the month of December. However, you may safely get your Social Security COLA notification online by utilizing the Message Center in your individual Social Security account if you’d want to learn your new benefit amount sooner. Early in December, before the notification is delivered, you can see this data. Benefit sums won’t be accessible until December. You won’t need to get in touch with us to find out your new benefit amount because you will get the COLA notification online or in the mail.
You can go into your personal Social Security account and modify your Preferences in the Message Center to opt out of receiving the COLA notification by mail if you would rather see it online. You can change your settings to decline to receive the COLA notification that is mailed to you and any other notices that are made accessible online. You may get a text or email alert when there is a new message waiting for you, did you know that? You will always be aware of critical communications from us, such as your COLA notification. To get the 2023 COLA notification online, you must register for an account by November 15, 2022, if you don’t already have one.
The increased 2023 benefit amount for Social Security recipients with Medicare will be made available in December via the mailed COLA letter and my Social Security’s Message Center.
How Social Security Calculates the COLA?
Since 1975, Social Security payouts have been yearly adjusted for inflation. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), a formal indicator of the monthly change in the price of a market basket of goods and services, including food, energy, and medical care, is used to adjust them.
For example, the CPI-W increased by 6% from July 2020 to July 2021. In August and September 2021, there was a year-over-year growth of 5.8% and 5.9%, respectively. These three numbers were averaged to come up with the 5% annual COLA that becomes effective in January 2022.
COLA Rises Each Year
The highest Social Security benefit in 2023 will be paid to recently retired workers.
The formula used to determine benefits for recently retired employees is changed each year to reflect changes in average salary levels. Accordingly, the maximum benefit often rises from one year to the next. For instance, the maximum payment for retired employees filing Social Security claims at full retirement age will increase to $3,627 in 2023 from $3,345 in 2022, an 8.4% increase.
To qualify for the maximum payment, recipients must have 35 years of earnings that are more than the amount due to Social Security payroll tax, which is 2023 will be $160,200. The vast majority of retired employees will get a reduced Social Security payout in 2023 since only approximately 6% of the population reaches that level.
2023 Changes in Social Security
Considering the rise in the third-quarter Consumer Price Index (CPI-W), between the third quarter of 2021 and the third quarter of 2022, Social Security and Supplemental.
Beneficiaries of Supplemental Security Income (SSI) will get a COLA of 8.7% in 2023.
The following is additional crucial Social Security information for 2023: