The COLA adjustment payments that will benefit around 70 million citizens received a generous boost in 2023 and will see an 8.7% increase, the most generous in over 4 decades. As all federal stimulus checks are being discontinued in 2022, this increase is significant as the record inflation has hurt Social Service beneficiaries badly along with other low and moderate-income households.
As of 2022, over 66 million Americans received social security benefits every month. That is way above 43.6% from the 2000 figures when only 45.4 million Americans were benefitting from Social Security support.
In the same span of over 20 years, the total American population has seen an increase of only 17.8%. this indicates that the number of American Social Security beneficiaries is increasing way quicker than the population.
There is no income bar on who can earn social security benefits while Social Security is no longer taxable from age 65 to 67. With the present retirement age in America being 66, beneficiaries can expect their full Social Security benefits without taxes once they hit that age.
But depending on the income earned, a beneficiary may or may not be eligible to receive the tax-free Social Security by age 62. The Social Security payments begin on the twelfth. The payment of people with a birthday between 1 to 10 will receive their payment on the second Wednesday. People who have their birthday between the 11th and 20th will receive their Social Security payments on the third Wednesday, and those with their birthday on the 21st and the last date of any month will receive their stimulus check payments on the fourth Wednesday of a month.
Social Security Amount Linked To The COLA Adjustment
The Social Security benefits start at $388.35 and could go up to $1,682. The amount is linked to the income level and the status of beneficiaries as the Social Security Administration has detailed.
Social Security payments are different from Supplemental Security income payments. The former are considered entitlement plans and are financially backed by Social Security taxes that are invested into special funds.
The Social Security Administration has detailed that people qualify to form the benefits under Social Security based on the claimants’ work history or in the case of dependents, that of their spouse or parents.
On the other hand, SSI payments are need-based and are given to families who have limited income and resources. The Supplemental Security payments do not require work credits so the beneficiaries are eligible to gain access to the SSI funds.
A person can benefit both from Social Security and SSI funds. Citizens who benefit from the SSI payments must give detailed reports of any changes in their individual or joint income, depending on their tax filing status. They must also share their living arrangements with the SSA.
But Americans who benefit from both the SSI and the Social Security payments will their payments on the first Wednesday of a month and the SSA payments on the 3rd. if an SSA payment does not fall on a weekend, they must receive their payment on a Friday before the 3rd week.
For citizens availing of the SIS benefits, the monthly checks reach beneficiaries with disability or blindness and who report resources that are below a particular economic level.
Over 65 million Americans are set to get their Social Security benefits this month the SSA informed. The average benefits going out to every retired worker comes to around $1,657, the primary income source for most beneficiaries.
Factors Contributing To Small SS Payments
Many American save funds in a retirement account, 401-k plans, and various qualified plans that are linked to their retirement plans. But it would be unwise to bank off the Social Security Administration payments as a supplement to that when the initial payment comes in.
For those who have just begun receiving their SS benefits, there are several reasons for the payment check being less than expected.
COLA Kicks In For January With A 8.7% Boost
Following a year of relentless high inflation figures, Social Security benefits will receive their biggest boost in 40 years starting in 2023. The SSA announced in October that the 2023 COLA adjustment will be 8.7%, a jump from the 5.9% in 2022.
Policy analyst on Social Security and Medicare, Mary Johnson said that it could probably be the last time that beneficiaries will receive a COLA this high, while it is also the highest in over 4 decades.
The Federal Reserve announced its 7th rate hike of the year and experts warn of future increases that could push the key rate in 2023 toward the crucial 5% mark. This could trigger another recession that could be as bad as the one that followed the pandemic.
But while the recession post-pandemic was brief due to the pumping of trillions of dollars through direct transfer to citizens, this recession could be in for a long period as there is no stimulus check this time to fall back on.
While retirees would welcome the big boost that they will invariably receive in their budgets, the high COLA combined with the t financial woes of the country could lead to dire consequences for both the future of Social Security and also for the beneficiaries.
Advantages And Consequences Of A Higher COLA
It is necessary to keep track of the changes the significant boost in benefit can bring to the overall income of a household. Lowe income homes could lose their eligibility for certain programs or may end up with less aid through Medicare Savings programs or Medicaid, or Medicare Extra Help. Beneficiaries with high income may end up paying more as part of their Part B and Part D premiums if their total income is higher than $97,000 in the case of individual filers and $194,000 for married couples filing jointly.
The larger COLA amount could push filers into the higher tax bracket also. Up to 85% of SS benefits are taxable if the income rises above $25,000 for individual filers and $32,000 for married couples filing jointly.
One major consequence of a high COLA is that the Social Security Old Age and Survivors Insurance Trust fund that backs the retirement plans is expected to run out by 2034 the latest trustees report states and a high COLA can even hasten the process.
