Here is when seniors will receive their 8.7% Social Security increase
Social Security: With an 8.7% cost-of-living rise in 2023, seniors and millions of other Social Security users in the U.S. will shortly get the largest benefit boost since 1981.
The Social Security Administration states that the annual cost-of-living adjustment, or COLA, goes into effect with the December benefits but that payments won't start until January 2023. In comparison to the typical benefit of $1,681 in 2022, the average benefit check will increase by more than $140 to $1,827 per month as a result of the increase.
The Social Security Administration modifies benefits each year
in accordance with the inflation rate, which has reached record highs in the past 40 years this year. Seniors' purchasing power decreased this year since the 5.9% raise they will receive in 2022 is significantly less than the price increase of this year.
According to a survey conducted in October by the advocacy organization the Senior Citizens League, about 4 in 10 seniors claimed they had to use their emergency savings to get by this year.
According to Mary Johnson, Social Security, and Medicare policy analyst at The Senior Citizens League, “anytime they experience a loss of purchasing power, that means they are using up other retirement resources, like savings, or maybe putting more on credit cards, or they might turn to safety net programs.”
“Retirees are just now attempting to deal and manage, and they have never experienced anything like this before,” she continued.
Seniors who have battled with rising prices for everything from food to gas would benefit from the 8.7% COLA boost for 2023, she said, but it might take some time for them to rebuild their emergency funds or regain stability financially.
Social Security benefits for 2023: Payment schedule
The Social Security Administration has announced that the January check for the next year will be calculated using beneficiaries' birthdates.
Payments are made on the second Wednesday of the month to customers whose birthdays are between the first and tenth of the month. On the third Wednesday of the month, those whose birthdays fall between January 11 and January 20, will have their compensation deposited or addressed to them.
On January 18, they will receive their first check which includes the higher COLA. Payments are made on the fourth Wednesday of the month to recipients whose birthdays fall on the 21st through the 31st. On January 25, they will receive their first COLA for 2023.
Although the nearly 70 million beneficiaries of Social Security will benefit from the COLA rise, Johnson pointed out that there are certain ramifications to be mindful of.
For example, certain beneficiaries may pay more in taxes as a result of the benefit increase. According to the Social Security Administration, retirement income over $25,000 for single individuals triggers taxation; for married couples, the threshold is $32,000.
The average Social Security payment in 2023 will be less than that, with single recipients' benefits almost reaching $22,000 the following year. Many seniors do, however, have additional retirement income streams that might drive them over the tax threshold, especially when taking into account the 8.7% increase from their monthly benefit checks.
Taxes, of course, depend on a variety of factors, including the standard deduction, which will rise in 2023 to account for inflation, and each person's tax status will be unique.
Seniors should also be mindful of how their larger Social Security benefits affect their Medicare premiums, according to Johnson.
Given that Medicare premiums are calculated on a sliding scale based on income, this is primarily a problem that will affect seniors with higher incomes.
Seniors who are single and earn less than $97,000 a year, as well as those who are married and earn less than $194,000 annually, will pay the $164.90 basic Medicare payment.
Seniors with incomes beyond those limits, however, will have to pay higher Medicare premiums, which can range from roughly $230 to $560 per month.
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