The Social Security Administration really sent letters informing people of an 8.7% rise.
The most well-known and widely-publicized future change is the increase in monthly benefit payments for 2023 brought on by the automated cost-of-living adjustment, or COLA. Almost all Social Security beneficiaries are aware of this change.
COLA Increase
Due to these increases, the average monthly retirement payout will be $1,827 in 2023, a rise of $146 from the 2022 level, which brings us back to the COLA.
A worker reaching full retirement age in 2023 will get a maximum benefit of $3,627 as opposed to $3,345 in 2022. Also, keep in mind that the maximum benefit for those reaching full retirement age in 2023 is $3,627.
Here is a crucial aspect of the COLA. Many readers have questioned whether they ought to have applied for payments in 2022 if they wanted to receive the January 2023 COLA. No, is the response. The benefit computation formula will include the COLA.
Therefore, you will still receive the 8.7% increase even if you don’t file for Social Security until the following year or a later year.
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Will Social Security Have Enough Funds?
Furthermore, this system performed admirably for a number of decades before things began to go awry with the retirement of the baby boomers.
As a result, more seniors than ever before filed claims for assistance. Additionally, because the generations that followed them were smaller, there were fewer employees to cover their payroll taxes.
By making specific changes to the program before the trust funds are completely drained, the government might be able to avert payment reductions. Politicians from both sides of the aisle agree that this is a major problem that has to be addressed, but they haven’t yet been able to agree on a solution.
Here are a few potential solutions:
- Increasing or removing the maximum amount of income that is subject to taxes
- Raising the FRA, which establishes when employees are eligible to receive their full Social Security payment
- Raising the present 12.4% Social Security payroll tax rate, which is evenly divided between the employer and employee
These elements may be present in the answer or something else entirely. All we can do right now is wait and see what happens.
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