2023 Social Security COLA: Should I File Early So I Don’t Miss the Historically High Increase?

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Social Security recipients will get a big bump in income beginning in 2023 thanks to an 8.7% annual cost-of-living adjustment — the highest in more than 40 years. The increase will raise the average payment by $146.

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If you are eligible for Social Security but haven’t signed up yet, you might wonder whether you should do so before the end of the year to take advantage of the historically high 2023 COLA. The short answer is no — you don’t have to apply ahead of the new year to receive the COLA increase.

The reason has to do with the way the Social Security Administration calculates your retirement benefits. As GOBankingRates recently reported, the COLA is applied to your primary insurance amount. This is the amount you would receive if you began receiving retirement benefits at your normal retirement age, according to the SSA. It is initially calculated when you first become eligible for Social Security retirement benefits at age 62, regardless of when you start collecting them.

When you apply for benefits, any COLA that has been put into effect since your initial eligibility is applied to your PIA, which is then recalculated. This basically means that if you are eligible for Social Security but have not yet signed up, the 2023 COLA is already baked into your eventual benefit,

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Rushing to apply for Social Security before the end of 2022 will have no effect in terms of next year’s COLA — but it could cause you to get a lower monthly payment if you are not yet full retirement age, which is 66 or 67, depending on when you were born.

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If you already applied for Social Security thinking you needed to in order to get the 2023 COLA, don’t panic. A limited “do over” option is available that lets you withdraw your application for benefits and repay any benefits you received — as long as it has been less than 12 months since you made your initial decision. The option resets your record as if you had never filed before, meaning you can wait until age 70 to apply to ensure the biggest check possible. The do-over is only available once, though.

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