• March 25, 2023

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Today’s Social Security column addresses questions about who the 2023 8.7% COLA will and will not apply to, what base amount the 8.7% COLA is applied to and which PIAs are used to calculate spousal benefits. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc.

See more Ask Larry answers here.

Have Social Security questions of your own you’d like answered? Ask Larry about Social Security here.

Will I Receive The 8.7% Social Security COLA Increase If I Turn 62 In April 2023?

I turn 62 in April 2023 and I read that I will not qualify for the 8.7% cola increase but everything else I read says as long as you turn 62 in the year of the increase you will receive it. Can you clear this up for me? Thanks, Richard

Hi Richard, Your Social Security retirement benefit rate will not be credited with the 8.7% cost of living adjustment (COLA). Only people who were born prior to 1/2/1961 will receive credit for the 8.7% increase in their retirement benefit rate, and those people will receive credit for the increase regardless of whether they start drawing benefits at 62, or 70 or anytime in between.

Social Security retirement benefit rates are indexed in order to keep pace with increases in the national average wage index (AWI) up until the person reaches 62. Then, after the year a person turns 62, their Social Security retirement benefit rate is increased by COLAs. So the first COLA that people born from 1/2/1961 through 1/1/1962 will receive is the COLA that will first apply to retirement benefits paid in 2024. Best, Larry


Will The 8.7% COLA Be Applied To My Current Benefit Amount Or My Original Benefit Amount?

Hi Larry, I started receiving my Social Security retirement benefit in 2020 at 68. Will my new benefit be my current rate times 8.7% or will the increase be applied only to my initial amount? In other words, after FRA, are subsequent COLAS cumulative and always based on the latest benefit amount or the initial starting benefit? Thanks, Jake

Hi Jake, Cost of living adjustments (COLAs) are added to your most recent benefit rate, not your original benefit rate. So if say $1,000 is your current benefit rate prior to any deductions (e.g. Medicare premiums, tax withholding), then your new benefit rate would be roughly $1,000 x 1.087. Your actual payment amount could vary, though, depending on the amount of any deductions that are withheld from your benefits. Best, Larry

Which PIA Will Be Used When My Wife Files For Spousal Benefits?

Hi Larry. I started drawing my Social Security retirement benefits at FRA four years ago. My wife is contemplating to start her spousal benefits. When Social Security calculates my PIA in order to determine my wife’s spousal benefits, would they adjust my FRA benefit as it was originally by adding four years worth of COLA adjustments? Or will the calculation be based on my original FRA benefit as it was when I first filed at FRA? Thanks, Isaac

Hi Isaac, Your wife’s unreduced spousal rate will be calculated based on 50% of your primary insurance amount (PIA) at the time she claims benefits. PIAs are updated each year to include Social Security cost of living adjustments (COLA), so if your wife applies in 2022 then your 2022 PIA will be used in the calculation.

You and your wife may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to ensure your household receives the highest lifetime benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care. Best, Larry


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