The Social Security Administration (SSA) announced in October that Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans would increase by 8.7 percent this year.
This means that benefits will rise by more than 140 dollars per month on average, as the 8.7 percent cost-of-living adjustment (COLA) kicks in in January, with benefits payable to more than 65 million Social Security recipients.
“In 2023, Medicare premiums will be lower and Social Security benefits will be higher, giving seniors more peace of mind and breathing room,” acting commissioner Kilolo Kijakazi said.
“This year’s significant Social Security cost-of-living adjustment marks the first time in over a decade that Medicare premiums have not increased, demonstrating that we can provide more support to older Americans who rely on the benefits they have earned.”
Meanwhile, the SSA announced an increase in the taxable maximum to 160,200 dollars. It should be noted that the maximum amount of earnings in 2022 was set at 147,000 dollars.
benefits will rise by more than 140 dollars per month on average, as the 8.7 percent cost-of-living adjustment (COLA) kicks in in January(Photo: corneliustoday.com)
Why does the Social Security wage limit rise every year?
The Old-Age, Survivors, and Disability Insurance (OASDI) program of Social Security limits the amount of wages that are taxed each year.
When those earnings are considered when calculating benefits, the same yearly cap applies.
The national average pay index changes each year, causing changes to this cap.
This annual limit is known as the contribution and benefit base or taxable maximum.
The Social Security Administration’s annual determination of the national average wage index is used to automatically modify the Social Security wage maximum each year.
What is the increase in the Social Security wage cap?
The Social Security wage cap has increased by nearly 25% in the last five years, rising from 128,400 dollars in 2018 to 160,200 dollars in the current calendar year.
Read also: Retirement Plan: Retirees Should Withdraw Before April 1 To Avoid 25% Tax Penalties
