The Social Security Administration (SSA) made a major announcement recently, revealing that the cost-of-living adjustment (COLA) for 2023 will be 8.7%.
This means that those receiving Social Security benefits or Supplemental Security Income (SSI) will receive an 8.7% boost in benefits in an attempt to help Social Security keep pace with rising inflation.
But when, exactly, will you start receiving these extra benefits? And how do you know whether you're eligible or what your new benefit amount will look like? Here's everything you need to know about next year's COLA.
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When will you receive these larger checks?
Social Security's 8.7% COLA will take effect in January 2023. Throughout the rest of 2022, you'll receive your normal benefit amount. But starting in January, you'll receive an extra 8.7% each month.
The average retiree collects around $1,681 per month in 2022, according to the SSA. Starting in January 2023, the average benefit will increase to around $1,827 per month.
If you have a mySocialSecurity account, you can see your updated benefit amount by checking your messages within your profile. Otherwise, you should receive a notice in the mail sometime in December detailing your new benefit amount for 2023.
Who qualifies for the COLA?
Anyone who collects Social Security benefits in some form will be eligible for the 2023 COLA. This includes anyone currently receiving:
- Retirement benefits
- Disability benefits
- Spousal or divorce benefits
- Survivors benefits
You also don't need to do anything to receive this raise. The SSA will automatically start sending updated checks in January 2023, and you don't need to fill out any forms or submit any additional information to receive the COLA.
Other changes to expect in 2023
Next year's COLA doesn't just affect your monthly checks. It will also affect other areas of Social Security, such as the earnings limit, the maximum benefit amount, and the maximum taxable earnings limit.
- Earnings limit: If you are continuing to work after taking Social Security, your benefits could be reduced depending on your age and how much you're earning. After the new COLA takes effect, the earnings limit will increase from $19,560 per year to $21,240 per year for those under their full retirement age. This means workers can earn more without having their benefits reduced.
- Maximum benefit amount: In 2022, the maximum you can receive from Social Security is $4,194 per month. Starting in 2023, the max benefit will increase to $4,555 per month.
- Maximum taxable earnings limit: This limit is the highest income amount subject to Social Security taxes. In 2022, it's $147,000 per year. But after the COLA takes effect, it will increase to $160,200 per year. This means high earners will be taxed on more of their wages starting in 2023.
Social Security's 2023 COLA will be the largest since 1981, and it's a historic moment for retirees and other beneficiaries. By staying informed about these upcoming changes, you can head into next year as prepared as possible.
