Soaring inflation and related Fed rate hiking actions had a silver lining for many social security recipients with the SSA confirming a 8.7% increase in Social Security benefits and Supplemental Security Income (SSI) payments in 2023.
This is in line with earlier projections and is one of the largest increases in forty years. The 2023 8.7 percent COLA will result in an approximately $145 increase to the average monthly retirement benefit.
With Medicare Part B premiums declining in 2023, which are deducted from Social Security, most retirees will see an even more significant boost to their retirement income and keep the entire COLA raise.
Retirees can start Social Security benefits any time between ages 62 and 70, with the benefit amount increased for every month of delay. Cost-of-living increases start at age 62 and continue for as long as you live.
Around 70 million Americans get Social Security beneficiaries which includes ~8 million Supplemental Security Income recipients.
According to the AARP, over 40% of Americans age 65 and older rely on Social Security for 50% of more of their income. So the latest increase will benefit a number of Americans.
“The guaranteed benefits provided by Social Security, including the annual COLA, are more crucial than ever, as high inflation remains a problem for older Americans….the automatic adjustment is an essential part of Social Security that helps ensure the benefit does not erode over time due to rising prices.”Jo Ann Jenkins, AARP CEO
Other key updates from the SSA for 2023 include:
- The average SS benefit (across all recipient groups) is going from $1,681/mo to $1,827/mo
- The maximum SS benefit at full retirement age is going from $3,345/mo to $3,627/mo in 2023
- Most federal government retirees, on the Civil Service Retirement System, will receive the same increase.
Employees and Self-Employed hit hard by COLA Increase
The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $160,200. This means that the average employee will pay around $9,930, or $818 more in Social Security taxes (excluding Medicare taxes) during 2023.
Self employed individuals will see double the hit as they have to pay the employer and employee share of Social security (and medicare) taxes.
2024 COLA Increase
With inflation expected to fall considerably in 2023, the 2024 COLA increase will like be much more moderate.
I will publish future 2024 COLA forecasts as they are made available and you can subscribe to get the latest updates.
SSA COLA Tables
Here are the official 2023 changes form the SSA:
18 thoughts on “Record 2023 COLA Increase Provides a Boost For Social Security and SSI Benefits But Larger Hit for Employees”
As I appreciate the sentiment in the increase in SS benefits in 2023, however, after doing the math in subtracting 10% Federal Tax and $165.00 Medicare I only will receive $23.49 extra per month.
That won’t even put 1/4 tank of gas in the car.
I thought I read that one of the senators was introducing a bill to make SS non-taxable for 2023.
Can anyone on this site clarify if in 2023 SS will still be subject to either 50% or 85% taxability?
The cost of living increase sounds nice in the beginning, but most do not see the effects. Most people on disability get food assistance and live on public housing. The increase makes their food stamps go down and their rent go up even more. In the end it really didn’t do anything in the long run to get it.
The small amout I will be getting does nothing more than put a half tank of gas in my car if that. I suffer from many medical problems and live in severe pain daily. I can haedley get out of bed some times to get out of my apartmenr or just use the restroom. With my disabilty I got a state medical card. I am on several medications and now The state have taken my pain meds away and will only pay for 4 prescriptions :( ~ So since I can not afford the prescriptions, I have stopped takeing most of them and take high blood pressure meds every other day. I feel our system is failing all the way around. Serously thinking about moving to another state, but probably have the same problem. I know for sure the pain pills are being given to the wrong people!!!!!!
Retire over seas! Your retirement will go further over there. Im 33 years old I plan on buying some property in Nicaragua or Costa Rica. I get Veterans Service Connected Disability at 30% which I plan on using to pay on the property, yeah it’s that cheap! I’m at $1225 a month with Social Security if I were at the retirement age, I’m hoping it’ll go up by the time I retire. So if you’re young look into buying property overseas.
Those who voted for Obama , have noone to blame but yourselves.
It is so cruel … the people who make these decisions are making millions … plus free health care. for 2 of us in our household with social security, we pay 800.00 per month for insurances. What are we supposed to do? 1.3 percent is like zero! What are we supposed to do? I raised 6 children and worked 2 & 3 jobs at one time. My husband worked 35 years at his place of employment; we deserve to be treated human!
There was a cost-of-living increase in 2008 which barely covered inflation. Another was not “doled out” until 2012 – and was TOTALLY eaten up by the increase in the cost of medicare. The number in this article (1.2%) tells me medicare is going up 1.2%. When you exclude food and fuel from the inflation figure, it may be possible to state ther is no inflation. However, all citizens eat and some travel. The ACTUAL inflation (with printing of money 24/7/360 under this administration) has been 24% since 2008. The same manipulation of inflation numbers as with unemployment figures. At least we now know that the medicare “Board” (death panel) is not our greatest concern … survival is.
The American Institute for Economic Research came out with their estimate today and said Social Security recipients may get a cost-of-living increase between 1.5% to 1.7%. The exact size will be known after the Labor Department releases the consumer price index for urban wage earners and clerical workers on Oct. 16. I will update the article accordingly.
Inflation is a lot more than 1.3%. It is the same story with the unemployment percentage. The government in the social seccurity case does not take into account gas prices as well food increases in arriving at this figure. Certainly it is not fair to the retiree.
Yes, the 3.6% increase last year was just enough to DOUBLE my Part D medicine copays. I now pay more per month on meds, than the increase was.
Maybe this years tiny little increase of 1.3%, which works out to a big $10 a month, won’t hurt me like last years did. It sure won’t help me, as my rent went up $55. So much for truly considering our cost of living increases! And that is just the rent part of my cost of living increases.
Interesting comments, clearly has strong political undertones. Not surprising in an election year. I would also caution about dismissing the COLA increase, particularly after last years 3.6% increase. Most folks in the private sector have not seen a pay raise in the last 3 years and are likely to see a modest 1 to 2 percent raise this year. What hits retirees more is the lack of return on their non-equity assets thanks to low inflation and interest rates.
I’m CSRS retired.A 1.38% COLA is certainly better than nothing,but it’ll be offset by health premium increases.I’ve lost all faith in the COLA formula since it doesn’t reflect the much higher true inflation rate.And I empathsize with working FEDS who are getting royally hosed again in 2013.The fiscal cliff is coming quickly.It seems our congressional/administration/Bernanke “geniuses” are just trying to postpone the inevitable recession/high inflation/even depression scenario.Everything I’ve ever known about economics isn’t being ptacticed by these clowns.
watch next year Gail! , if Romney gets the chance, he will turn this economy around! Give him a chance, you gave B.O. a chance!!!! you have been hood winked !
Yep. Romney will take credit for the economy improving thanks to obama’s policies! If things get worse he will just blame Obama. Sadly the country has not had a good leader in 12 yrs
Gail, NObama has been blameing Bush for the last 4 years,esp. when his own polices fail. If you recall NObama said if he did not accomplesh his goals in his first term (note he has not) he would not run for re-election. But here we are in 2012 and he has lied yet again (no surprise there).
For the record I am not republican or democrat so please do not lump me into any grourps.
Most of my life I thought that SS was mandatory. A Trust, SS Trust fund, that you paid into for retirement. The (Trust) was robbed, and is continued to be robbed, by politicians to pay for foreign wars, and bail out fat cats, and line Corporate pockets. Where is the TRUST? The Govt. can bail out GM, an big banks, and foreign countries, and they cut their obligations to their seniors.
2011 my SS check was ….$1238. today it is $1183…….. what is wrong with this picture? I qualify for NO entitlements…… NONE……ZILCH…….. I repeat what is wrong with this picture?….. I was told by a SSA employee to stop paying credit cards and other bills and definitely NO cable!!!!! Hmmmmm I will tell the judge this when I am sued…..:( My hubby and I worked hard thinking and being told thar we were investing in our retirement years……… now I am told that Soc Sec is an entitlement? Who is crazy here?…….
1.3%, barely enough information to keep above inflation. Seniors get shafted once again. But at least its better than what Romney will do to us.