For millions of retirees, Social Security payments make up a big part of their income. One-quarter of workers say Social Security will be their main retirement income.
But in 2023, there will be a big change to Social Security that could cut your benefits by hundreds of dollars per month.
Cost-of-living adjustments are given to people who get Social Security almost every year (COLA). The goal of this change is to keep the buying power of benefits.
Last year, recipients got a huge COLA of 5.9% to make up for rising prices in the second half of 2021. But this year, the raise could be bigger than ever before.
This estimate of 8.7% is not set in stone; rather, it will depend on the behaviour of inflation in the month of September.
No matter what the actual COLA is, it will be a moment in history for retirees. The average monthly benefit is about $1,670.
If your COLA is higher than average, your benefits will go up more each month, but you may have to pay more in taxes on them.
Millions of seniors will still get much-needed help from the COLA next year. But there are more effects than just more money for benefits.
Most retirees forget all about the $18,984 Social Security bonus. If you're like most Americans, you're behind on saving for retirement by a few years or more.