The Social Security Administration announced earlier this year that retirees would receive larger Social Security checks due to inflation. The administration is implementing an 8.7% cost-of-living adjustment starting in January 2023 due to inflation being at its highest level in almost 40 years.
Base on the article published by NBC News on December 03, 2022, the average retiree benefit will rise to $1,827 per month, an increase of $146 from the prior year.
The adjustment ensures that the benefits’ value does not decrease with inflation because benefits make up about 30% of all seniors’ retirement income. Of course, you should try to save for retirement independently through a 401(k) plan offered by your employer or an IRA since the majority of people don’t receive a sizable amount of retirement income from Social Security benefits.
Payroll tax deductions that are split between the employee and employer pay for Social Security benefits. Employers and employees each pay 6.2% of the 12.4% payroll tax for Social Security. Payroll taxes are only levied up to a certain level of income.
In response to shifts in wages, the Social Security Administration modifies the income requirement every year. Up from $147,000 in the prior year, the payroll tax is now levied on up to $160,200 of an individual’s salary for 2023.
Retirees can anticipate higher Social Security benefits in 2023 as a result of inflation-driven price increases on everything from food to gasoline. To help retirees keep up with inflation, Social Security retirement benefits will increase by 8.7%. Only time will tell if this has an impact on how quickly the Social Security trust funds run out.