How Much Will Social Security Payments be in 2023?
Retired workers depend on Social Security payments to make ends meet, and every year they eagerly wait to know how much their monthly payment will be. According to recent estimates, there will be a significant increase in the payments of retired workers in 2023.
In 2022, the median payments for retired workers were $1,657, but with a Cost Of Living Adjustment (COLA) of 8.7%, payments would be $1,801 per month. However, this is just an approximate calculation, as the Social Security Administration (SSA) does not calculate payments based on just current benefits.
The Primary Insurance Amount
The SSA calculates the payment amount for each beneficiary based on their Primary Insurance Amount (PIA), which is the benefit amount a person would receive if they retired at full retirement age. Your PIA is based on your average monthly earnings over a period of time, adjusted for inflation.
How Are Social Security Payments Calculated?
To determine your PIA, SSA considers your highest 35 years of earnings. If you worked fewer than 35 years, those missing years are counted as zeros. SSA then averages your earnings and applies a formula to calculate your PIA.
Once your PIA is calculated, SSA determines your actual payment amount by adjusting it based on the age at which you retire. If you retire early, your payment is reduced, while waiting until full retirement age increases it.
The Bottom Line
In conclusion, the Social Security payment calculation process is complicated, and there is no way to predict precisely how much your payment will be in 2023. However, if there is a COLA increase of 8.7%, the estimated monthly payment for retired workers will be $1,801.
It’s important to remember that Social Security payments are a critical source of income for many retired workers, and understanding the PIA and how payments are calculated is essential to plan for retirement.