American Social Security beneficiaries should expect an important update from the federal government (Social Security Administration) this week, specifically starting Thursday, October 13.
Nearly 1 in 5 Americans currently receives Social Security benefits, and this monthly income accounts for about 30% of the total income of seniors. Many of these individuals have seen their benefits diminished by high inflation since last year, as rising prices have spread across gas stations, supermarkets, and even the Medicare program, the federal health aid for the elderly. But the future is starting to look a bit better for Social Security beneficiaries.
This week, the government will make a historic cost-of-living adjustment (COLA) for current beneficiaries and will offer a higher maximum retirement benefit for new beneficiaries. Details about these changes are likely to be announced by the government soon.
What Should You Expect?
• Cost-of-Living Adjustment
Social Security benefits are adjusted each year to account for inflation.
In 2022, inflation hit the U.S. economy at levels not seen since the 1980s. This suggests a massive Social Security COLA next year. Experts believe benefits could increase by 8.7% in 2023. This would be the largest COLA in four decades. If this happens, the increase could help Social Security beneficiaries regain some of the purchasing power they lost in 2022.
• Higher Maximum Retirement Benefit
Social Security benefits are based on lifetime earnings and the age at which a person first claims benefits. Eligibility for Social Security begins at age 62, but those who want their full benefit – also known as the primary insurance amount, or PIA – must wait until full retirement age (FRA) to claim Social Security. And those who want the maximum benefit at FRA must earn more than the maximum taxable earnings for 35 years. In 2022, that amount was $147,000.
The maximum retirement benefit paid to new beneficiaries at FRA increases each year to account for changes in overall wage levels. For example, this amount rose to $3,345 this year, an increase of about 6.3% from the previous year. Given the trajectory that inflation has followed, the maximum retirement benefit paid to first-time beneficiaries at FRA may see another increase of 6.3% next year, raising the payment to $3,555 per month in 2023.
Of course, very few people are actually eligible for the maximum retirement benefit, but anyone can use the “My Social Security” portal to estimate the size of their future retirement checks.
Visit the Social Security Administration website and create an account here: www.ssa.gov/myaccount/