Increased social security benefits welcome sight in new year

HAMPTON ROADS, Va. (WAVY) — If you are receiving Social Security or SSI benefits, you may see a bump in your check or deposit this month due to a cost-of-living adjustment.

That adjustment is actually lower than last year, but with inflation going down, economists believe you’re going to feel that increase a little more.

On average, those who receive these benefits will see an extra $50 per month this year in their checks, and although this increase in benefits is welcomed by many, it really doesn’t add up when everything else seniors are paying for, such as medication and housing costs, are going up.

“Knowing what benefits are available to you is going to be very important as you and your family think about, well, what is my retirement look like? When do I retire? When can I retire,” said ODU Economics Professor Bob McNab.

McNab said it’s never too early to start thinking about retirement. He said Social Security was never meant to be the primary retirement system for Americans, but it’s evolved to be the main of income for many retirees.

One of the big changes in the New Year is that Social Security recipients will see their benefits increase by 3.2%.

“Unfortunately, you’ll also see Medicare premiums increase as well,” McNab. “So the net gain is not going to be 3.2%. The increase in the earnings thresholds means you can, if you so desire and are able to go out, … earn extra income to supplement your Social Security check without losing your full benefits.”

And even though the extra $50 a month helps, a lot of the things seniors have to pay for have gone up too.

“We’ve just gone through a sustained bout of inflation that eroded purchasing power and medical costs aren’t decreasing,” McNab said. “And the cost of living, whether you are renting or owning a home, hasn’t decreased as well.”

In addition to the cost of living increase, the allowance that you can earn while on Social Security and retain your full benefits has increased as well.

“If you’re at the full retirement age, you can now make more than $50,000 annually before you start seeing your Social Security benefits reduced for essentially excess earnings,” McNab said. “And also, of course, this means that Social Security benefits for those who haven’t reached their full retirement age will be reduced at a much lower threshold.

“In other words, if you have retired early, your ability to earn money and retain your full [social] security benefits is significantly less than you have [if you] hit the full retirement age as defined by Social Security.”

Another change is the amount of earnings subject to Social Security tax.

“In other words, current workers who earn up to approximately $168,000 will pay their Social Security taxes on all those earnings,” McNab said. “Any earnings above that, essentially, are not taxed by Social Security. But most Americans, in fact, the vast majority of Americans, do not earn more than $168,000. And so really, that is not something that they will see affect their paychecks.”

McNab said these changes shine a light on the significant challenges ahead that lawmakers are going to have to find the political will to address.

“There is nothing saying that Congress and the president could not get together tomorrow and say, look, we know that Social Security benefits have declined in real value over the last three decades,” McNab said. “Let’s try to make up some lost ground, and this is how we’re going to do it, but the political environment is not conducive to that discussion.”

McNab said if you’re in your 20s and 30s, you should start thinking about your retirement plan now, and if you’re in your 50s and 60s, you should start thinking about your exit plan from the workforce.

He said if you have a plan, it’s easier to deal with any uncertainties that pop up along the way.

The Social Security Administration should have already notified you about your new amount, but if they haven’t, you can also view your COLA notice online.

For the latest news, weather, sports, and streaming video, head to WAVY.com.