Social Security benefits For COLA 2023

Social Security benefits | Every year, in the middle of October, the Bureau of Labor Statistics publishes its much awaited report on changes to the Consumer Price Index during the previous 12 months, which are often rises.

Why is the Consumer Price Index for Urban Wage Earners and Clerical Workers, a small, obscure government statistic, so well-liked? The cost-of-living adjustment (COLA) that Social Security recipients would get the next year is determined by the report, which has been the case for the previous 48 years.

The majority of my readers are already aware of what I’m reporting because my column has a lengthy lead time. As I’m sure you are well aware, the Social Security benefits for all 65 million recipients will increase by 8.7% in 2023.

Furthermore, despite the fact that this is the largest rise in many years, I usually dread bringing up COLAs in this column because every time I do, I receive a deluge of letters from people who complain that the raise is insufficient.

The problem, though, is that a lot of economists and social planners think Social Security COLAs are too generous. (I’ve discussed why in previous columns, but today’s space is limited so I won’t go into that debate.) Because of this, suggestions to lower cost-of-living increases are frequently included in talks about long-term Social Security reform.

Let’s get back to the Social Security COLA for 2023. These increases will result in an average monthly retirement payout of $1,827 in 2023, up $146 from the 2022 figure. A worker reaching full retirement age in 2023 will get a maximum Social Security benefit of $3,627 as opposed to $3,345 in 2022.

Also, keep in mind that the maximum benefit for those reaching full retirement age in 2023 is $3,627. That does not imply that it is the highest Social Security benefit that any individual may acquire. Millions of Social Security recipients receive significantly more than that, mostly because they continued to work well after their FRA and/or postponed taking their benefits until they were 70.

Here’s another crucial aspect of the COLA. For the COLA that is given in January 2023, many readers have asked me if they must register for social security benefits increase in 2022. No, is the response. Even if you wait until the next year or any other year to register for Social Security, you will still receive the 8.7% increase since the COLA will be factored into the benefit computation process.

Even though this is a Social Security column, I feel compelled to highlight the forthcoming reduction in the Medicare Part B premium, which is often taken out of recipients’ Social Security benefits. The fundamental Part B premium in 2023 will be $164.90. This is $5.20 less than the rate in 2021. Rich people will also continue to pay more than the standard premium, as they have for the past 20 years.

I only wish to make one brief statement before avoiding the complex subject of Medicare premiums. Social Security and Medicare are totally independent systems, controlled by totally different federal organizations, and they have totally different laws and regulations affecting their benefit and payment structures, despite the fact that most older persons associate them with one another.

I’ve already described how Social Security COLAs are calculated, for instance. The rise in the Part B Medicare premium is unrelated to the CPI. Instead, it must be established at a level that pays for 25% of the program’s operating expenses as required by law. The remaining 75% is paid for the taxpayers. (Again, rich individuals contribute more than the 25% share.)