New 8.7% COLA Social Security benefit hike
8.7% COLA Social Security benefit hike: Here’s when you will see it.
Millions of Social Security recipients in the United States are going to benefit from the largest Cost Of Living Adjustment since 1981 with an 8.7% increase in 2023.
According to Social Security Administration this cost of living adjustment will take effect with the December benefits that will be paid out January of 2023. This increase will raise the average benefit of checks by more than $145 to an average of $1,827, a large jump compared to the average of $1,681 recipients got in 2022.
The Social Security Administration adjusts payments based on the United States inflation rate which has recently spiked to its highest level in forty years. During this time Seniors and other Social Security recipients have lost much of their purchasing power even after the 5.9% increase in 2022, which is well below yearly prices. According to a survey done by the Senior Citizens League roughly 4 out of 10 seniors said they drained their savings to stay afloat in 2022.
Mary Johnson, a Social Security and Medicare policy analyst for The Senior Citizens League says that this is a problem of buying power. Any time these senior citizens loose buying power from their social security disability “that means they are exhausting other retirement resources, like savings, or may be putting more on credit cards.” Although the 8.7% COLA adjustment for 2023 is going to help many Seniors and Disability recipients with surging costs it may still take a while for many of them to build back their savings to feel financially secure again.
Payment dates for 2023 Social Security Benefits
According to the Social Security Administration the January benefits will be disbursed based on recipients birth dates. Below are the specifications for each payment date:
For people who began claiming social security before 1997 that received both Social Security and Supplemental Security Income will receive their first payment on January 3.
For people who received only SSI will get their initial 2023 payment on December 30, 2022. The reason for this is that these benefits are usually paid on the 1st of every month, but January 1st is a Holiday and December 31st is a Saturday. Therefore the Social Security Administration said they will issue these checks two days earlier than usual.
If a recipient began to claim Social Security after May of 1997 and their birth date falls between the 1st and the 10th of any month, their check will arrive on the second Wednesday of each month. This means that their first check with the 2023 COLA will come on January 11.
If a recipients birthday falls between the 11th and the 20th of any month then their checks will arrive on the third Wednesday of every month. This would mean that for the month of January they will receive their check on January 18.
Finally if a recipients birthdate of any month falls between the 21st and the 31st of any month their checks will be scheduled for the final Wednesday of each month. This means that their first 2023 COLA check will come on January 25.
How this may impact Taxes and Medicare premiums
Although the COLA increase is a positive for the roughly 70 million Americans that receive Social Security there are some other implications to be aware of. For example this hike in benefits could result in higher taxes. Single taxpayers who receive more than $25,000 in retirement income need to pay taxes, although the average of $1,827 a month is below that threshold at $21,924 a year above average earners may have to pay taxes. This may also effect married couples who have a threshold of $32,000 before paying taxes, if both recipients receive the average of $1,827 they would be well above this threshold at $43,848 and need to pay taxes. It is also important to note that most Social Security recipients also have other forms of income that can make these tax requirements trickier than in past years.
The next issue that Social Security recipients should be aware of is the impact that their higher Social Security benefits on Medicare premiums. This issue is especially important for recipients with higher incomes since Medicare premiums work on a sliding scale based on income. For example recipients who are single with an income less that $97,000 or married couples with an income less than $194,000 pay the Medicare premium of $164.90. For Single recipients and married couples who receive more than their annual threshold will be subject to medicare premiums between $230 to $560 a month.
Call to Learn if You Qualify for Disability Benefits
If you have questions or would like to discuss your claim with a Phoenix Social Security Disability lawyer, we are available to take your call 24/7. An initial consultation is free of charge so there is no risk to you. Our firm works on a contingency fee basis, so you pay nothing up front for our services. We only get paid if we successfully help you obtain disability benefits.