The Social Security Administration (SSA) has released the COLA (Cost- Of-Living-Adjustment) Information for 2023.
Read further to understand the benefits and other related information.
2023 would be facing the largest increase in the SSA COLA since 1982.
The Social Security and Supplemental Income (SSI) benefits would be 8.7 % in 2023. Roughly 70 million Americans are supposed to be the beneficiaries. An average increase of about $140 per month would happen in the SS benefits. Some citizens will receive both SS and SSI benefits.
Yearly COLA is proportional to the changes in the Consumer Price Index (CPI). It is analyzed according to the Labour Statistics of the Department of Labor’s Bureau and is liable under the Social Security Act.
An 8.7 % increase in COLA would be causing a higher tax bill for certain retired employees. It is also supposed to accelerate the reduction of the trust fund of the Social Security Administration.
Kilolo Kijakazi, the Acting Commissioner of the Social Security Administration said that Medicare premiums would have fallen and Social Security benefits would have raised in 2023.
This would be indirectly better for the senior citizens of the nation. She added that the Social Security COLA of 2023 would be the first time in over 10 years that the Medicare premiums are not having a rise.
This in order shows that the authorities could provide more support to older Americans who rely on their earned benefits.
The initial beneficiaries of 2023 would be above 65 million people.
2023 SSA COLA – Key Points
Bigger Tax Bill In 2024
Who All Will Receive A Bigger Tax Bill In 2024?
Some of the retired employees would receive a higher bill in 2024.
As per the current estimated statistics,
The 8.7 % increase in 2023 would result in some of the beneficiaries exceeding the limit. Presently around 50 % of the recipients are paying federal tax for the SS benefits that they receive.
The list of the people who would receive the higher taxes would be designated in accordance with the modified adjusted gross income plus half of SS benefits. This would be the combination of the filing status and the combined income.
- Those who have a single status in the tax return filing status and combined income ranging between $25,000 and $34,000 would be having a 50 % taxable portion of benefits.
- Those who have a single status in the tax return filing status and a combined income of $34,001 and above would be having an 85% taxable portion of the benefits.
- The taxable portion of benefits would be 50% for those who have a joint status in the tax return filing and combined income ranging between $32,000 and $44,000.
- The taxable portion of benefits would be 85% for those who have a joint status in the tax return filing and a combined income of $44,001 or above.
High Pace In The Exhaustion Of The SS Trust Fund
There are possibilities of the Social Security trust fund getting exhausted sooner than the estimated date.
The most alarming concern of the SS program is the still pending depletion of the source of the SS benefits. The ratio of the contributing manpower to the beneficiaries has been significantly falling in recent years.
A low birth rate and an increasing population of seniors are resulting in a high number of beneficiaries whereas the revenue generated from the tax is on a decline.
As per the data available from the Board of Trustees, the trust fund would be completely exhausted by 2035 if the present conditions prevail.
There is also the alarm of inflation continuing over the years and for this year it was estimated between 3.92% and 5.14%.
The CPI – W (The Consumer Price Index for Urban Wage Earners and Clerical Workers ) has had a hike of 8.8% in the initial 10 months of 2022. This exceeded the calculations made by the Board of Trustees.
This is a prior reason for the high 2023 COLA and the sooner-than-expected depletion of the SS resources. The sooner the depletion of the SS trust fund happens might also potentially be enough to drag forward the insolvency date by a whole year.
The concerns are being reviewed by authorities including President Biden and resolutions are under control.
Also Read:- Universal Basic Income Program Explained!
Impact On Inflation
8.7 COLA V/S Inflation Pace
In 2022 a 5.9 % COLA was applied to the SS Checks. It was the largest since 1983 until the 2023 COLA was released. Even a 5.9% COLA was not able to withstand the inflation and as a result, the SS checks faced a loss in buying power.
As the 2023 COLA is the record one since 1982 let’s have an overview of the COLA of the past years:
|Overlook On COLA Over The Years|
( From 1975 – 2023 )
|January 2023 – 8.7%|
|January 2022 – 5.9%|
|January 2021 – 1.3%|
|January 2020 – 1.6%|
|January 2019 – 2.8%|
|January 2018 – 2.0%|
|January 2017 – 0.3%|
|January 2016 – 0.0%|
|January 2015 – 1.7%|
|January 2014 – 1.5%|
|January 2013 – 1.7%|
|January 2012 – 3.6%|
|January 2011 – 0.0%|
|January 2010 – 0.0%|
|January 2009 – 5.8%|
|January 2008 – 2.3%|
|January 2007 –3.3%|
|January 2006 – 4.1%|
|January 2005 – 2.7%|
|January 2004 – 2.1%|
|January 2003 – 1.4%|
|January 2002 – 2.6%|
|January 2001 – 3.5%|
|January 2000 – 2.5%|
|January 1999 – 1.3%|
|January 1998 – 2.1%|
|January 1997 – 2.9%|
|January 1996 – 2.6%|
|January 1995 – 2.8%|
|January 1994 – 2.6%|
|January 1993 – 3.0%|
|January 1992 – 3.7%|
|January 1991 – 5.4%|
|January 1990 – 4.7%|
|January 1989 – 4.0%|
|January 1988 – 4.2%|
|January 1987 – 1.3%|
|January 1986 – 3.1%|
|January 1985 – 3.5%|
|January 1984 – 3.5%|
|July 1982 – 7.4%|
|July 1981 – 11.2%|
|July 1980 – 14.3%|
|July 1979 – 9.9%|
|July 1978 – 6.5%|
|July 1977 – 5.9%|
|July 1976 – 6.4%|
|July 1975 – 8.0%|
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