Retirees on Social Security could see monthly benefit rise an average of $159 in 2023 due to inflation, estimate finds. High inflation points to a possible 9.6% Social Security cost-of-living adjustment in 2023, according to a new estimate based on data released Wednesday.
And given the trajectory inflation has followed, Social Security's COLA in 2023 could be as high as 9%, according to Marc Goldwein of the Committee for a Responsible Federal Budget.
The official 2023 earnings limits will not be published until October, but the limits have increased at an annual pace of 2.9% over the past decade. If the next increase falls in line with the average, the low limit would rise from $19,560 to roughly $20,135, and the high limit would rise from $51,960 to $53,485.
As a result of changes to Social Security enacted in 1983, benefits are now expected to be payable in full on a timely basis until 2037, when the trust fund reserves are projected to become exhausted.
The funding shortfall could be solved by cutting benefits for all Social Security beneficiaries — including those who are currently receiving benefits — or simply cutting benefits for future Social Security beneficiaries. If nothing is done until 2034 or 2035, however, all benefits would need to be reduced by 22%.
Current workers will still receive Social Security benefits after the trust fund's reserves become depleted in 2034, but it's possible that future retirees will only receive 78% of their full benefits unless Congress acts.
Yes. The Social Security taxes you now pay go into the Social Security Trust Funds and are used to pay benefits to current beneficiaries. The Social Security Board of Trustees now estimates that based on current law, in 2041, the Trust Funds will be depleted.
According to some experts, the Social Security COLA in 2023 could be as high as 10%. It's probably more probable to see something closer to 9%. In either case, the COLA for Social Security may be the highest since 1981.
The full retirement age isn't budging in 2023
The full retirement age, which stands at 67 years for anyone born in 1960 or later, won't be changing again without congressional action.
This year, in the 12 months ending August 2022, inflation surged by 8.3%. And now, experts are anticipating a COLA of around 8.7% for 2023.
The 2023 Social Security COLA
In August, the Consumer Price Index, which measures the average cost of living expenses, climbed by 8.3%.
Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans will increase 5.9 percent in 2022. Read more about the Social Security Cost-of-Living adjustment for 2022. The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $147,000.
The Social Security Trust Funds Will Be Exhausted By 2034
Under current laws Social Security will exhaust its trust funds by 2034, and then benefits will be cut by 22%, according to the 2021 Social Security Trustees report. However, Congress could also make adjustments to improve the program.
Yes. Full retirement age (FRA) — the age at which are eligible to claim 100 percent of the benefit Social Security calculates from your lifetime earnings record — has already increased from 65 years old to 66 and 4 months and will rise incrementally over the next several years to 67.
The full retirement age for those who turn age 62 in 2022, born in 1960, is 67. The full retirement age will remain age 67 for everyone born in 1960 or later.
Now 56 percent of beneficiaries pay income tax on a portion of their benefits, sometimes as much as 85% if their total income exceeds upper thresholds. There is no age at which you will no longer be taxed on Social Security payments.
According to the 2022 annual report of the Social Security Board of Trustees, the surplus in the trust funds that disburse retirement, disability and other Social Security benefits will be depleted by 2035.
Starting December 2024, compute the COLA using the Consumer Price Index for the Elderly (CPI-E). We estimate this new computation will increase the annual COLA by about 0.2 percentage point, on average.
What Happens When The Money Runs Out? Social security will be living like you did in your twenties – paycheck to paycheck. With no more trust fund to pull from, only the tax revenues from current workers will be available to cover the benefits being paid.
California. In America's most populous state, some 4.3 million retirees who collect Social Security can expect to receive an average $1,496.13 per month from the program in 2020, or $17,953.56 over the course of the year. California is another state where benefits are below average for the U.S.
After the original stimulus checks, some lawmakers did push for another stimulus check, but the social spending plan stalled in Congress in late 2021. Congress has not been planning to provide beneficiaries with stimulus money.
The agency this year is expected to announce its 2023 cost-of-living adjustment, or COLA, on Thursday, October 13.
Social Security beneficiaries are on track to receive an 8.9% cost-of-living adjustment in 2023. That will pump another $124 billion into the economy, or $96 billion more than a typical year.
To acquire the full amount, you need to maximize your working life and begin collecting your check until age 70. Another way to maximize your check is by asking for a raise every two or three years. Moving companies throughout your career is another way to prove your worth, and generate more money.
Under terms of the bill, anyone who is a current Social Security recipient or who will turn 62 in 2023 would receive an extra $200 in each monthly check.