By Kevin Theissen
It is now official that starting in January Social Security benefit checks will be going up by 8.7%.
The CPI-W, which is the index used to calculate the Cost of Living Adjustment (COLA), rose by 8.5% over the last year to an index level of 291.8. The Social Security Administration (SSA) takes the average of the indexes for July, August, and September (291.9), subtracts the average for the same period last year (268.4) and determines the percentage gain, which was 8.7%.
If you are currently receiving SS benefits, you will not have to do anything to receive the change in your benefit amount. You will be notified by mail in early December with your new benefit amount but you could sign up for email or text notifications on the SSA website to get your updated information faster. If you are 62 or older and have not started benefits yet, you will also get the adjustment, but it will not show in your statement. When you do claim your benefit in the future, it will show any adjustments which could include COLA and credits for delaying.
The COLA notice will also provide information for Medicare beneficiaries on premiums for 2023. It is not entirely certain yet but it’s already known that Part ‘B’ base premium will be $164.90, a decrease of $5.20 from the current $170.10.
The Social Security wage base which is the maximum amount of income subject to Social Security taxes will increase to $160,200 from $147,000 currently. The retirement earnings test exempt amounts rise to $21,240 per year, or $1,770 per month, up from the current $19,560/year or $1,630/month. The full retirement age year amounts increase to $56,520/year or $4,710/month, up from $51,960/year or $4,330/month.
It is uncertain how quickly the fed will be able to put the brakes on inflation and therefore, how long this increase in benefits will last. Also, most recipients pay income tax on a great portion of their benefits so if you do not automatically have tax withheld from your monthly benefit, you should plan accordingly to avoid surprises next spring.
Kevin Theissen is the owner and principal of HWC Financial in Ludlow.
