Skip to Main Content

Social Security Benefits Increase 8.7%, Highest Increase Since ‘81

The Social Security Administration (SSA) announced on Thursday that social security benefits will jump to 8.7% for 2023, which would be the largest increase in over 30 years. This comes at a time when inflation has been rising at astounding rates; upwards of 11%. This cost of living adjustment (COLA) will affect around 70 million Americans, including almost 50 million retired workers, with the average retired worker’s Social Security retirement benefit increasing by $146.

How was the 2023 COLA calculated?

The calculations behind this adjustment are based on an increase in the Consumer Price Index for Urban Wage Earners (CPI-W) between the third quarter of 2021 and the third quarter of 2022.  In other words, it looks backward at inflation to determine the increase in the cost of living.

This large increase bodes well for the seniors who rely on these social security checks every month, as it allows them to make up a lot of financial ground they may have lost to inflation in the past year.

Another Announcement from the SSA

The SSA had another announcement on Thursday as well, and this one was not so pleasant.  The SSA announced that the maximum amount of earnings subject to Social Security tax will rise 9% in 2023, which equates to $160,200 (the previous maximum earnings subject to tax was $147,000). This adjustment will mean higher taxes for about 6% of workers.

The maximum Social Security tax will also be rising $1,637 from the previous $18,228, to the new $19,865 figure. $9,934.50 of that will come directly out of an employee’s paycheck per year, up previously from $9,114.

Wrap Up

This massive increase in monthly social security checks will be welcomed by most retirees, however, with these things there always seems to be a catch. This initiative is no exception with the tradeoff being higher taxes, and for some, and even possibly pushing some into an entirely new tax bracket.

 
This entry was posted in Blog, News & Articles and tagged , , , , . Bookmark the permalink. Follow any comments here with the RSS feed for this post. Both comments and trackbacks are currently closed.