The first Social Security checks and bank deposits with the largest cost-of-living adjustment in 40 years will arrive in January 2023.
The average retirement benefit increases by $146 per month to $1,827; while the average disability benefit increases by $119 per month to $1,483. Recipients will also benefit from a 3% reduction in the amount they owe each month in standard Medicare Part B premiums. Those drop to $164.90 per month. Medicare Part B covers outpatient medical care, such as regular doctor visits.
The 8.7% increase in COLA comes in response to decades of high inflation that began to plague the US economy late last year. Social Security recipients will also have benefited from the timing. The COLA measurement was officially conducted in July, August and September, when 12-month inflation reached 9%, 8.6% and 8.5% respectively. On Tuesday, the Bureau of Labor Statistics reported that inflation for wage earners fell to its lowest level in more than a year, at 7.1%.
How the COLA custom payments are rolled out
If a recipient’s birthday falls between the 1st and 10th of a given month, they will receive their payment on the second Wednesday of the month. So anyone with a birth date in this initial range can expect their first payment to come in on Jan. 11, according to the Social Security Administration.
For recipients with birthdays between the 11th and 20th of a given month, payment will be made on the third Wednesday of the month. This group can expect the first payment of the new year on January 18.
The remaining group will receive their payments on the fourth Wednesday of the month, meaning the first payment for 2023 will be on January 25.
Supplemental Security Income (SSI) recipients will continue to receive their payments on the 1st.
With the exception of SSI payments, Social Security benefits remain taxable and tax brackets also change due to inflation. A Social Security recipient who files as an individual with total income — including anything received outside of Social Security — between $25,000 and $34,000 may have to pay income tax on up to 50% of their Social Security benefits. If their income was more than $34,000, they may have to pay taxes on 85% of their income. For joint tax filers, the 50% threshold starts between $32,000 and $44,000, and the 85% threshold starts at $44,000.