Q. I decided last June to start receiving Social Security at my full retirement age of 66 years and 4 months. I was, of course, happy to see that I would receive an 8.7% COLA starting in January. Will people who have not yet applied for Social Security also get the COLA in the future, even if they have not been claiming for another year or two?
– Retired
A. We want to make sure everyone knows that they can visit the Social Security Administration website for the most up-to-date and detailed information on benefits.
Social Security recipients like you have welcomed a higher cost of living (COLA) adjustment in the wake of inflation.
To answer your question, COLA only applies to those currently claiming benefits, said Amber Leach, a certified divorce financial analyst with Equitable Advisors/RICH Planning Group in Morristown.
However, if you don’t file for benefits, there are ways to increase your benefits, she said.
You can try to increase your income before you retire or delay your benefits, she said.
For example, if you’re working and haven’t yet claimed your benefits, your benefits may increase depending on each year you continue to work, Leach said.
“Social Security bases your benefits on your top 35 years of work, so if you continually earn a higher salary, it will have a positive impact on your benefits,” she said. “Each year that you continue working if that salary is higher than your salary at the start of your career, that year will be replaced as counting towards your 35 years of work.”
If you are not working, each year you wait to claim your benefit from age 62 to age 70 will increase your benefit.
“If you claim your benefit before full retirement age, you will receive a reduced benefit depending on your date of birth and how many months before you receive it,” she said. “If you take your benefits at the age of 62, you can expect about 30% less benefits.”
But if you wait from full retirement age to age 70 to claim your benefit, you’ll get about 8% for each year until age 70, she said. After 70 years there is no more increase or profit for your benefit.
The COLA increase for 2022 was 5.9% and for 2023 it is 8.7%, Leach said. Given the level of the COLA increase, it makes sense to talk to your financial advisor about whether early claiming makes sense for you and your circumstances, she said.
Mail your questions to [email protected].
Karin Price Mueller writes the obsessed column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.coms weekly electronic newsletter.
