Social Security will see a lot of changes this year, many of them related to the largest cost of living adjustment (COLA) in more than 40 years.
Social Security will see a lot of changes this year, many of them related to the largest cost of living adjustment (COLA) in more than 40 years. The new COLA will affect payments to Social Security beneficiaries, but it won’t be the only change you’ll see in 2023. It’s worth noting that Social Security and Supplemental Security Income (SSI) benefits for about 70 million people in the United States increased 8.7 percent in 2023.
Here are six changes to the program effective this year, according to a fact sheet recently released by the Social Security Administration.
New COLA law goes into effect
The big news for 2023 is an 8.7% increase in Social Security’s COLA, the highest since an 11.2% increase in 1981. The sharp increase in COLA this year is due to higher inflation, which is also the highest in 41 years.
The average monthly Social Security payments for all retired workers rose to an estimated $1,827 from $1,681, an increase of $146 per month, the Social Security Administration said. For anyone receiving Social Security benefits, the new payment amount began on January 2023. For those receiving Supplemental Security Income (SSI), the new payment amounts began on December 30, 2022.
One thing to note: The 2023 COLA of 8.7% will not apply to all Social Security recipients. Some increases will be higher than 8.7% and others will be lower due to a variety of factors, including your primary insurance amount (PIA) and when you enroll in Medicare. SSA must mail COLA notices to beneficiaries providing details about the new payment amounts.
Increase Social Security disability thresholds
Social Security Administration Pays monthly interest For people who are unable to work for a year or more because of a disability, benefits generally continue until beneficiaries are able to return to work on a regular basis. However, there are also cases where you can have a qualifying disability even if you are still working, for example if you are unable to do the work you previously did because of your medical condition.
In this case, you are only eligible for a certain amount of income. When you exceed this limit, you cannot be considered to have a qualifying disability. Here are the minimum changes for 2023, based on average monthly income:
The federal SSI payment standard increases
Social Security beneficiaries who also qualify for Supplemental Security Income (SSI) benefits saw their maximum federal SSI payment amounts increase in 2023, based on COLA, by 8.7%. For individuals, the standard rises to $914 per month from $841 in 2022. For couples, the amount rises to $1,371 per month in 2023 from $1,261 in 2022.
Increase the maximum benefits for workers who retire upon reaching full retirement age
Americans who retire at full retirement age (66 or 67, depending on when they were born) saw their maximum benefits increase this year. The maximum increases to $3,627 per month in 2023 from $3,345 per month in 2022.
History of Social Security’s COLA Amendments
The Social Security program has offered cost-of-living adjustments (COLA) every year since 1975. Before 1975, wage increases were up to lawmakers.
Over the past decade, with very little inflation, COLA’s budget has been very low, with little or no wage increases for many years. Here are the details for the last 10 years of Social Security payment adjustments:
|year||TAIL (increase percentage)|
Change in amounts exempt from the income test
Social Security withholds benefits if your income exceeds a certain level and you are below full retirement age (FRA). This is called the amount exempt from the retirement income test. Under the SSA, one of two different exempt amounts applies: a smaller amount in the years before the year you reach FRA and a larger amount in the year you reach FRA.