Social Security Benefits: Here's How to Calculate How Much Your Payments Will Increase in 2023

The Social Security Administration (SSA) is expected to send letters to Social Security beneficiaries in December, including information about how much their Social Security benefits will be next year, taking into account the 2023 COLA.

According to AS, the cost-of-living adjustment (COLA), applied to benefits starting in January, has been announced to be 8.7%.

Here is a quick Social Security payments calculator: multiply your existing benefit by 1.087. For example, if your monthly payment is $1,200, you multiply it by 1.087 to get $1,304, which is a $104 increase.

The average Social Security payments handed out in September 2022 was $1,673.88. With an 8.7 percent COLA rise in 2023, the average payout in January could be $1,819.

The average monthly payment for people who get Social Security Disability Insurance was $1,232.11. It will be increased to $1,339.30.

Social Security Benefits of Retired Workers Will Increase

The SSA calls anyone getting retirement benefits a retiree, but it is possible to keep working while getting Social Security payments.

However, claiming Social Security early carries a permanent penalty, and workers who apply for benefits before reaching full retirement age (FRA) may have their benefits reduced temporarily based on their income.

Earnings limits usually rise yearly based on the changes in general wage levels. The lower limit in 2023 is $21,240, and the higher limit is $56,520.

Here's how it works: For persons who get FRA for the entire year, $1 in benefits is deducted for every $2 in earnings beyond $21,240.

Beneficiaries who will reach FRA in 2023 will have $1 in benefits deducted from their payments for every $3 in earnings above $56,520 before reaching FRA.

The Social Security payments calculator formula is updated annually to account for changes in general salary levels, USA Today reported.

That means the maximum amount a newly retired worker can receive from Social Security each year increases, but the actual amount depends on the age they begin receiving.

In 2023, workers who just retired and are eligible for the maximum Social Security benefits and claim it at FRA will get $3,627 per month.

For those who begin receiving benefits at age 62, this amount drops to $2,572. The amount rises to $4,555 for those claiming benefits at 70 years old.

How Will the 2023 COLA Affect the Seniors?

While the 8.7% increase is the highest in 41 years, the COLA for 2022 is only 5.9%, while inflation reached 9.1% in June.

"The 5.9% COLA received this year has fallen short on average by 50%," the nonprofit Senior Citizen League said in a statement.

"Without a COLA that adequately keeps pace with inflation, Social Security benefits purchase less over time, and that can create hardships -- especially as older Americans live longer lives in retirement," it added.

Some experts said that the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), used to figure out the annual COLA, is not an accurate indicator of how much money seniors need.

According to CNET, Connecticut Democratic Rep. John Larson is sponsoring a bill that would change how the COLA is calculated.

It will be linked to the Consumer Price Index for the Elderly, which focuses on the cost of food, housing, medical care, and other products and services that affect older Americans more.

Larson's bill would also eliminate the current five-month waiting period to get payments and set a new minimum benefit of 25% above the poverty line.

Larson also proposed to provide caregiver credits to individuals who quit their jobs to care for children or other dependents.

This article is owned by Latin Post.

Written by: Bert Hoover

WATCH: Social Security Benefits Increase in 2023 - From U.S. Social Security Administration