Social Security Increase for 2023 (What Retirees Should Know)

Social Security is set to increase in 2023.

But the reality is that Social Security’s buying power has plunged over the decades due to inflation.

Social Security Increase 2023

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Full transcript:

SPEAKERS

Alex Okugawa & Anthony Saffer

Alex Okugawa 0:00
Social Security is set to have a massive increase in 2023. And a question we’ve been getting from a lot of folks is how much are my benefits going to go up? And honestly, our social security benefits keeping up with inflation over time. Today, we’re going to discuss what retirees should know. Stay tuned.

Hey, there, it’s Alex and Anthony, from One Degree Advisors. If you’re new here, we are Certified Financial Planners that help folks with all things tax, retirement, and investment related. Anthony inflation again, it’s still kind of the topic people are talking about. It’s very hot. And so retirees that you know, so security is a big source of their retirement income can be a little bit concerned about inflation, right? Is my Social Security benefits going to keep up with inflation? How much will my Social Security benefits increase in 2023?

Anthony Saffer 0:53
Yeah, prices going up food, gas, energy, these types of things. It’s definitely a concern for retirees. Now, the good news is that experts are estimating that the cost of living adjustment for Social Security will go up about eight to 10%. So for the average Social Security earner, that’s about $1,800 per year, that’s a good increase.

Alex Okugawa 1:11
And that’s good, I think, in 2022, what cola was about 5.9%? So right now, things are still in this limbo mode, where we don’t know exactly what it will be. But when will we know more finalized numbers? For 2020?

Anthony Saffer 1:23
Yeah, once the the end of September inflation numbers come out. So the Social Security Administration is is scheduled to announce that on October 13, and that’s when we’ll know the actual number going up for 2023. The good news, too, is that even if you’re age 62 or older, and you’re deferring Social Security, in other words, you’re still putting it off, you still get that actual increase in your calculated number.

Alex Okugawa 1:47
Yeah. And that’s important for people to know, the only thing I’d add here is that these cost of living adjustments are the increases right to Social Security are always playing catch up. Right. So you know, you have to deal with higher prices in the meantime, to get a raise year after year, that again, that’s just the way the system is set up. But let’s go into the second part of this, which is, you know, again, I’m a retiree. So security is a big chunk and a big part of my income. And so when I see how these high inflation numbers, it’s like, yeah, I see my benefits could be going up. But the question is, is, Does Social Security historically keep up with inflation? Can I count on it to do that?

Anthony Saffer 2:30
Yeah, the short answer is no. And there’s a study that the Senior Citizens League, Mary Johnson, she produces this study every year updates it. And it basically says that since 2000, Social Security recipients have lost about 40% of their buying power. So that’s a pretty big chunk. I mean, if you put that in, in real terms, for every retiree that spent $100, back in, in 2000, on groceries, they can only spend $60, today to get the same amount. Yeah.

Alex Okugawa 2:56
Now, for a lot of retirees, not all but a lot, you know, like medications, and Medicare is a really big piece of their expenses in retirement. And I think from the data that we’re looking at, we’ll post that report, like you said, but Medicare, you know, eats into quite a bit of these increases,

Anthony Saffer 3:15
And that should be the same expectation going forward is that when you see this cost of living adjustment, it could also mean that Medicare premiums are increasing, I think last year, it increased 14.5%. So that ate into the cost of living adjustment

Alex Okugawa 3:28
More than the five and 5.9%.

Anthony Saffer 3:31
Yeah, it becomes a fraction of that, but it becomes a, it becomes a big chunk. So your net amount, you’re really not getting the full benefit of that cost increase.

Alex Okugawa 3:39
And this is so important, because if historically, so security has not kept up with the pace of inflation, then we need to be prepared, and we need to plan for the scab. So how do we do that?

Anthony Saffer 3:53
Yeah, so let’s really talk about about three things. Number one is the cost of living adjustment for this upcoming year. Don’t treat it like a windfall, make sure we’re using it for increased expenses. For those necessities.

Alex Okugawa 4:08
That way your budget really stays in touch, a lotof people will see that headline number that makes them Oh, man I got at an eight or 10% raise in retirement. Well, it’s just kind of keeping up.

Anthony Saffer 4:14
Yeah, and that may be intuitive if you’re already feeling the pinch on those expenses, but just being proactive with that. And number number two, is make sure to monitor the cost of living adjustments for from your other income sources. We recently just posted another video, high inflation and retirement do these three things that was really focused deeper on that, which is basically like if I line up all my different income sources, whatever they may be rental income if I’m getting a pension, even my investment withdrawals. What is the the inflation rate that I’m able to take from that are really like the increase to keep up with inflation? Yep. And then the third and final thing is just planning for the future. Yeah. And that’s where you want to widen out so you definitely want to look at this year and say here and now is most important, but is it sustainable? What am I looking for? We’re in the future by projecting out my income to make sure I don’t run out of money because you don’t want to put yourself in a worse situation down the road.

Alex Okugawa 5:07
And now let us know what you think are your Social Security benefits keeping pace with inflation? Let us know your thoughts in the comments down below. And if you enjoy today’s video, please like and subscribe for more. Thanks for watching.

Transcribed by https://otter.ai

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