Changes in the United States economy are very different from year to year. Because of inflation, Social Security is not enough for many Americans, so the COLA is also very changeable from year to year. But sometimes the COLA is not enough for a retiree collecting a Social Security benefit to pay all their bills each month.
In the current year 2022, the Social Security COLA increased by 5’9% to maintain the purchasing power of retirees. This increase set alarm bells ringing since inflation increased by such a large amount. With this inflation it is normal to think that benefits will increase a little more next year. At least that is what experts are saying on the subject.
Social Security COLA to have a big adjustment
We already know that the COLA for this year 2022 has gone up almost 6%, getting very close to the 7’4% it went up in 1982. This year is still the year with the highest COLA, but it could change for next year 2023. Inflation continues to rise and the data ensures that a large increase will be needed so that in 2023 pensioners can have a sufficient monthly payment.
The figure will be around, according to GoBankingRAtes experts, 8’6% in the increase of the Social Security COLA. If this is finally the case, next year will set a new record for increases in price adjustments. But these figures are not final and we still have to wait until after July, August and September to know the total increase for next year 2023.
Broadening the wage base
Through a new bill, the wage base could get a bump in 2023. The wage base is the tax paid to Social Security. This tax could increase in the year 2023 to offset some inflation and provide for larger trust funds. If this Bill is eventually carried into execution, benefits could also increase a bit.
A large portion of Americans don’t make more than the base salary anyway, so this tax increase would only affect the highest wage earners, of which there are very few. If you have a salary below $147,000, this will not affect your wallet or your bank account at all. With this, Congress would aim to have greater financial solvency for Social Security.
The maximum benefit could increase
If the wage base finally increases in 2023, the maximum benefit may also increase. In order to balance everything, Social Security would increase the money exponentially. With a higher wage base, the person would get a higher benefit in the future. All this depends, of course, on the economic situation of the country at the time of retirement.
In any case, these increases provide a larger fund for pensions and retirements, so it is a long-term benefit that is good for everyone, regardless of their original salary base. Currently, the maximum Social Security benefit is $4,194 per month and could change by next year.
Other possible changes to Social Security
All of the changes we have previously mentioned are potential, i.e., nothing is certain at this time. It is very possible that some of the changes will be made, but we won’t see it with complete certainty until next year 2023. Most of these changes will be necessary so that in 2035 retirees will still be able to collect their benefit.
If there are no changes before that year, it is very possible that Social Security will be able to pay only 80% of the benefits, so that every month retirees will receive a much smaller payment than they originally have. In any case, it is still too early to really know what will happen, although some of these changes can be more or less intuited.