2023's 8.7% COLA is the largest in over 40 years
The Social Security COLA will grow by 8.7% in 2023, which will be the largest increase since 1981, when it increased by 11.2%.
For Americans who get Social Security benefits in 2023, there is good news despite the year's financial difficulties. The biggest cost of living adjustment in 41 years, a result of rising inflation, was an 8.7% COLA in Social Security payments. Social Security beneficiaries in the United States will receive larger monthly payouts starting in 2023. Payments to retirees, those receiving Social Security Income (SSI), wives and children of those with disabilities, as well as those who get SSI, will grow. If you get Social Security retirement or disability payments, this increase will take effect in January 2023. If you receive Supplemental Security Income (SSI), it will start on December 30, 2022.
New SSDI Threshold Increase
Social Security disability benefits typically very slightly rise each year. However, the 8.7% increase in 2023 will benefit the more than 9.2 million Americans who receive Social Security disability benefits.A $160,200 increase in the maximum taxable income
The average monthly payment for disabled workers is predicted to increase to $1,483 in 2023 from $1,364 in 2022. The predicted average salary for disabled workers with a spouse and one or more children is $2,616, an increase of $209 from 2022.
The amount that handicapped workers can earn without losing their eligibility for SSDI has increased along with the payments. Benefits for disabled non-blind workers might now reach $1,470 monthly, up from $1,350 in 2022. In 2023, the maximum for blind workers will be $2,460 per month.
On income up to $147,000, employees were required to pay the 6.2% Social Security tax (with their employer matching that payment) in 2022. Any earnings in excess of that sum were exempt from taxation.
The highest taxed income will rise to $160,200 in 2023. The Social Security tax rate is still 6.2% (12.4% for self-employed individuals).
New COLA Adjustments
The goal of COLA is to prevent inflation from eroding the purchasing power of SSI and Social Security benefits. The Consumer Price Index (CPI-W) of the Department of Labour, which is based on third-quarter average CPI-W readings from July through September of the current year, is used to calculate cost of living. When the CPI-W increases and the cost of goods and services rises, inflation increases. COLA aids in reducing these expenses. The Consumer Price Index will not increase if there is no COLA increase. The cost of living will increase by 8.7% in January 2023, the most since 1981.
Threshold for Credit Earning Rose Up
If you were born in 1929 or after, you must have worked for at least 40 credits (with a cap of four credits annually) to be eligible for Social Security benefits. Each year, a little more money is needed to get one credit.
It will cost $1,640 in earnings per credit in 2023, an increase of $130 from 2022.
The number of credits needed for SSDI depends on your age when you become disabled.
Social Security Administration
Increased Maximum Monthly Payout at Full Retirement Age
The absolute earliest that you can start claiming Social Security retirement benefits is still age 62. However, claiming before your full (or normal) retirement age will result in a permanently reduced payout. In 1983, Congress passed a law increasing the full retirement age by two months each year from 2000 to 2022, until it hit 67. Now, anyone born in 1960 or later will not reach full retirement age until they are 67.4
If you delay collecting Social Security past your full retirement age, then you can collect more than your full, or normal, payout. In 2023, the maximum payout of a worker retiring at full retirement age is $3,627, up $282 from 2022.
Tip: You can continue to earn an extra 8% of your benefit every year up until age 70 by delaying retirement, just like in 2022.
The Bottom Line
In line with the general price increases customers saw owing to inflation in 2023, Social Security payouts grew significantly. Your financial status and retirement goals, among other things, will determine when it is best to start taking your retirement benefits. To completely comprehend your Social Security benefits and how they can fit into your total retirement budget, think about speaking with an expert disability attorney at Law Office of Irene Ruzin.