2023 Changes to Social Security Benefits, Ep # 268

There’s big news in the world of retirement. The news is so big that we have 2 articles from mainstream media sources to check out in this week’s retirement headlines segment. If you’ve been wondering how inflation will affect Social Security benefits you won’t want to miss out on this episode.

Stick around for the listener questions segment to hear how to transition from biweekly paychecks to monthly portfolio withdrawals in retirement. This transition is trickier than you might think, so you won’t want to miss my tips for making the adjustment.

Outline of This Episode

[2:02] The average Social Security beneficiary will increase by $140 per month
[4:52] What is COLA?
[9:20] Will you get the increase if you delay filing for Social Security?
[10:21] How to manage a monthly payday
[13:54] How to get extra credit from your portfolio

Social Security is facing the largest cost of living adjustment in over 40 years

You know the retirement news is big when all the mainstream media sources are covering it. Both CBS and ABC news ran articles about the upcoming 8.7% increase in Social Security benefits. The average beneficiary will see an increase of $140 per month. This historic increase contrasts last year’s 5.9% increase in that Medicare premiums are actually decreasing by 3%. Last year’s increase was dampened by the 14.5% increase in Medicare premiums.

The 2023 increase is the highest seen in 40 years. Prior to that, the highest increase in Social Security was in 1980 at 14.3% with the next highest being in 1981 at 11.2%.

What is the cost of living adjustment?

The automatic COLA has been in place annually since the 1970s as a way to help seniors keep up with the rising costs of inflation. Before the 1970s, increases in Social Security literally took an act of Congress. Since Congress had to authorize increases, the process sometimes took years.

The Social Security Administration uses the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, to measure inflation. Since this price index targets workers, it means that less weight is given to healthcare costs, and more emphasis is put on transportation and gasoline costs. For this reason, many say that COLA is falling behind and is an inaccurate reflection of seniors’ expenses.

When will you see the COLA increase?

The new payments will begin in January 2023 and will be sent based on your birth date.

If you were planning on delaying your Social Security benefits and don’t want to miss out on this COLA increase, don’t worry. It will factor into your benefit when you decide to take it. Deferring Social Security benefits doesn’t mean that you’ll miss out on COLA increases. Even though it can be tempting to join in and get the raise, delaying will mean an even bigger benefit the longer you wait up until age 70.

Listen in to hear the details about the 2023 Social Security COLA increase and discover tips on how to manage shifting from 26 paychecks per year to only 12.