8 Things About Social Security Increase You Need to Know

This week the Social Security Administration announced a 8.7% increase, the highest cost-of-living increase in 40 years. 

Here are eight things you need to know about this increase: 

1. It takes place immediately as of January 1, 2023.

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2. The cost-of-living adjustment for 2023 will be 8.7%, according to the Social Security Administration — the largest increase for Social Security benefits in more than four decades. 
3. Does it cover those on SSI, Social Security Disability? Yes.
4. The average increases are substantial. The maximum federal SSI benefit for individuals will jump to $914 per month in 2023, up from $841 this year. The maximum will be $1,371 next year, up from $1,261.
5. How will I know my specific increase? Sometime in December you should receive a letter from Social Security detailing your new benefit for 2023.
6. You might end up paying more taxes. In 1984, Congress created thresholds for wealthier Social Security recipients to pay taxes on their benefits.

   Since those thresholds have not been updated since 1984, inflation is making it easier for you to move in those brackets — and when you do, your benefits can be taxable for 50% to 85%. So check with your tax preparer on the impact!

   The thresholds are low, just $25,000 in income for individuals, and $32,000 for couples!

7. Medicare B could be impacted. Premiums for seniors are based on income, including Social Security.
8. The annual COLA increase for Social Security benefits is not based on inflation of goods and services. Instead, the SSA looks at the increase for consumer prices for urban workers. Since urban dwellers likely have higher costs, this benefits most beneficiaries.

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