Broker Check

Social Security Cost of Living Increases 8.7% for 2023

November 14, 2022

It is the time of year when all of the new numbers for 2023 are announced by government agencies. Along that vein, the Social Security Administration recently announced that retirement and disability benefits will increase by 8.7% effective January 2023, the largest increase in over four decades.  On average, individual’s benefits will increase by more than $140 per month but can be much more for those receiving larger benefits. For example, an individual who is receiving Social Security retirement benefits of $2,500 per month will realize a monthly increase of $217.50, or $2,610 per month. In other words, it will be the equivalent of getting an extra monthly payment next year.

In addition, beneficiaries will also see a reduction in their Medicare Part B premiums by approximately $5 per month, something that rarely occurs with annual Medicare Part B premium adjustments. Unlike some years in the past, beneficiaries will receive a larger net benefit from the 8.7% COLA combined with lower Medicare Part B Premiums.

Given the larger COLA, we recommend reviewing your other income sources and engaging in proper tax planning to account for a potentially larger portion of Social Security benefits being subject to taxation.