Here are three things retirees should know about the projected Social Security increase in 2023. Nothing has been decided yet, but 2023 seems to be the year of the largest rise in Social Security benefits in over 40 years. This is significant for the millions of Americans who rely on Social Security to fund their expenses.
As of right now, it’s only possible to surmise, but it’s safe to predict your Social Security payments will look very different next year. In practice, though, things are unlikely to alter significantly. So don’t budget for large spending in 2023. Or, if you’re thinking about it, don’t expect Social Security to aid you much.
There are still many misconceptions regarding this upcoming benefit increase. All receivers should be aware of three facts concerning Social Security.
In order to get it, there is no need for you to do anything.
The Social Security Administration’s annual cost-of-living adjustments (COLAs) are expected to raise Social Security payments. There is nothing receivers must do to get these bigger payments, and you will automatically begin receiving extra benefits from the program in January 2023.
The increase is simply to assist your funds in keeping up with inflation.
The yearly COLAs are intended to assist Social Security benefits in keeping up with inflation. If Social Security payouts stayed unchanged over time, their purchasing power would dwindle. You’d have to spend more money in the future to maintain your current lifestyle since inflation will continue to boost the cost of living. COLAs keep your purchasing power relatively constant over time.
Because of this year’s strong inflation, the 2023 COLA is likely to be rather big. With the cost of goods continually growing, Social Security needs a significant boost to keep up with inflation. So, while more cash is always welcome, your Social Security checks in 2023 are unlikely to drastically alter your lifestyle.
Your payments will be increased by a percentage of your existing monthly benefit.
The Social Security COLA is based on a percentage of your current check, not on a specific dollar amount. It helps make the increased fair for everyone. Additionally, it means that the increase you receive might differ from that of your spouse or neighbor.
CPI report: Inflation falls from a 40-year high but remains high at 8.5% as gas costs decline.
In October, the official Social Security COLA for 2023 will be released. It is based on third-quarter inflation statistics, which do not conclude until September 30th. CPI-W, also known as the Consumer Price Index for Urban Wage Earners and Clerical Workers, will be measured by the Social Security Administration to determine how much has increased since the third quarter of 2021. The percentage increase is then converted into the 2023 annual COLA.
No one knows for certain what it will be because all the data required for the computation isn’t yet. Nevertheless, according to the Committee for a Responsible Federal Budget (CRFB), the 2023 COLA might be as high as 10.8%. That would add an extra $175 per month to the existing average monthly Social Security payout of $1,623.