Another big cost-of-living adjustment (COLA) could be coming for Social Security recipients in 2023. Social Security Administration officials recently confirmed that the increase would be “closer to 8%.” This would be the biggest COLA jump since 1981. The average monthly Social Security check is about $1,658, an 8% jump means beneficiaries could see an increase of $132.64 per month in 2023, bringing the check to about $1,790.
The reason for the jump is inflation. The Consumer Price Index (CPI) jumped to 8.6% in May, the steepest increase since 1981. The trend has some analytics predicting a COLA bump as high as 8.6%.
The 69 million Americans who collect Social Security received a 5.9% COLA increase in 2022 for the same reason. This was the most significant COLA increase in 40 years.
The Social Security Administration will make its official COLA announcement in October, basing its decisions on the previous three months of inflation data. Benefit changes would start in January.
Another possible change is the earnings limit. If you file for Social Security benefits before full retirement age and continue to earn income, your benefits may be reduced. For 2022, workers who earn less than $19,650 per year, or $1,630 per month, were exempt. Workers exceeding this limit faced a reduction in benefits of $1 for every $2 earned above this limit. Those reaching full retirement age in 2022 faced a reduction of $1 for every $3 they earned above a separate limit of $51,960 per year or $4,330 per month until they hit full retirement age.
These limits are subject to an annual adjustment, and experts say you can expect one in 2023.
A married couple can have up to 81 options for electing Social Security. We help families make this important retirement income decision with the other aspects of their retirement. You can talk to a retirement planner about Social Security maximization strategies or other retirement questions by scheduling a complimentary 15 Minute Retirement Check-Up Call.
Sources: Finance.Yahoo.Com and CNBCNews.com