Social Security 2023: How Much Will the COLA Increase Benefits for the Average Senior Couple
On Thursday, the Social Security Administration is set to announce the biggest cost-of-living adjustment (COLA) to the program in four decades. According to advocacy group The Senior Citizens League, the increase could be as much as 8.7%, or roughly an extra $144 in monthly benefits for recipients — and even more for couples where both individuals file.
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As the Wall Street Journal reports, the Social Security Administration has adjusted benefit dollars on an annual basis since 1975, as a means to ensure the 70 million Americans who receive this income have enough supplementation to account for regular inflation. And with the surmounting rates of inflation in 2022, the SSA is projected to increase monthly payouts in these record numbers.
Per CBS, the last time the SSA gave as much of a COLA boost was in 1981 when there was an 11.2% increase. And the year prior, in 1980, there was an increase of 14.3%. Advocates have questioned whether the 2023 increase is good enough. As CBS notes, inflation reached a level of 9.1% in June, which is above the projected 8.7% COLA increase.
Though any increase in benefits is welcome news to many seniors and other Social Security beneficiaries who have been feeling budgets strapped due to increasing costs for food, gas and medical care. New payment amounts will be reflected starting with the January 2023 deposits.
If the 8.7% figure is true, that would mean benefits would, on average, increase to about $1,801 versus the current payout of $1,657 for individuals — or an extra $1,730 per year, says Forbes.
For couples both filing for Social Security benefits, that amount will be even greater. Though not double what individuals receive, couples would, on average, start to receive $2,993 a month starting in January, over the $2,753 received monthly in 2022. That equates to an extra $2,874 in benefits for the year, adds Forbes.
One important thing to note is that, with the increase in payment amounts, it might put couples over the threshold for what is considered taxable income for Social Security benefits. Unfortunately, as of now, COLA increases don’t also increase the brackets for taxes owed for these benefits.
For couples filing jointly, if total benefits (also including any IRA payouts, part-time work, etc.) are less than $32,000 combined, no taxes will be owed. For amounts between $32,000 and $44,000, 50% of the combined income will be taxed. For amounts greater than $44,000, up to 85% is taxable, says Forbes.
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Given that the increase is so sharp for 2023, experts say that more couples should anticipate paying more in taxes on their benefits going forward.
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This article originally appeared on GOBankingRates.com: Social Security 2023: How Much Will the COLA Increase Benefits for the Average Senior Couple
