31 Mar Will I get the cost-of-living increases for Social Security?
Q. I turned 62 in March 2022. It sounds like I’m eligible for the 8.7% Social Security cost-of-living (COLA) increase that was effective January 2023. But what about the 5.9% COLA that took effect the year before? Would I be eligible for it?
— Retired now
A. With inflation, every extra bit of income is important.
That goes for people who rely on Social Security income, too.
Every year that you are eligible for Social Security, beginning at age 62 and up to the time you claim benefits, each cost-of-living (COLA) adjustment is automatically applied to your future benefit, even if you haven’t yet filed for Social Security, said Gerard Papetti, a certified financial planner and certified public accountant with U.S. Financial Services in Fairfield.
The Social Security Administration does not prorate a COLA increase, therefore, since you attained age 62 in March 2022, you would start having COLA increases applied to your benefit in the calendar year after attaining the age of 62, which is 2023, Papetti said.
Consequently, you would not be eligible for the 5.9% 2022 COLA as you would have had to turned age 62 by Jan. 1, 1960, he said.
Note if you elect to receive benefits as early as age 62, benefits would be permanently reduced, and subject to the earnings limitation test.
The earnings limit for workers who are younger than full retirement age (FRA) is $21,240, Papetti said. FRA ranges from age 66, born before 1954, to age 67 for those born in 1960 or later. The Social Security Administration (SSA) deducts $1 from benefits for each $2 earned over $21,240, he said.
The earnings limit for people reaching their full retirement age in 2023 is $56,520 and SSA will deduct $1 from benefits for each $3 earned over $56,520 until the month the worker turns full retirement age, he said.
“There is no limit on earnings for workers who are full retirement age or older for the entire year,” he said.
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This story was originally published on March 31, 2023.
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