Social Security Changes for 2023 Revealed: When will they take effect?
One more year is coming to an end, and with it comes changes to Social Security for 2023. Below, when will they take effect and what are they?
Another year is drawing to a close, and with it comes new changes to Social Security benefits, among them an 8.7 percent cost of living adjustment (COLA) that will be applied to benefits starting in January.
Under federal law, the Social Security Administration (SSA) must increase the monthly payments sent to retirees, those with disabilities, and their families, with the objective of equalizing the benefits with the current rate of inflation. In this way, purchasing losses are avoided for beneficiaries when inflation is high. This equalization is known as COLA. And, while the COLA does help keep the purchasing power of these recipients up, compared to where they would be without it, the Senior Citizens League says it’s not enough.
A recent report completed by the group found that since the early 2000s, around forty percent of the purchasing power of the benefits has been whipped clean. In real terms, this means that beneficiaries are only able to buy sixty percent of the goods and services they would have been able to just twenty years ago. As more Baby Boomers retire, the question of how the government will handle the added pressure of lower-valued benefits being sent to support more seniors remains unanswered.
Reveal Social Security changes for 2023
The increase in the COLA is calculated based on the Consumer Price Index for Urban Salaried and Administrative Workers (CPI-W) for the third quarter of the year. The calculations down by the Social Security Adminstration topped almost nine percent, making it one of the largest increases in US history.
With the COLA increase, the payment of Social Security beneficiaries will increase, on average, $144 per month, resulting in an average monthly payment of $1,800 for a single individual.
Coupled with the COLA increase, another significant change in Social Security is the decrease in the cost of Medicare Part B premiums. Taking into account that premiums are automatically reduced from social security benefits payments, the beneficiaries of the program will be able to hold onto more of their income each month.
When will the changes take effect?
The Social Security changes go into effect in December 2022, so benefits begin to be paid in January 2023. This means that the first payment with the increased COLA will reach all recipients beginning next year, based on their date of birth, with the exception of Supplemental Security Income (SSI) recipients, who will see the increase reflected in their December check.