Have you been getting your Social Security benefits for a while now, but feeling like maybe you could be getting a bit more? You’re not alone. Many people assume that once they start receiving their benefits, that’s it – that’s the amount they’ll get for good. But the truth is, there are several scenarios in which your Social Security benefits might actually increase after you’ve started receiving them. In this article, we’ll explore three of them, so you can make informed decisions about your benefits. Whether you’re looking to boost your income or simply understand your options, keep reading!
If you’ve received a letter from the Social Security Administration (SSA) lately, it might have been about something called a Cost of Living Adjustment (COLA). This is a periodic increase in benefits that’s based on the rising cost of living in the United States. And if you think your benefits might not be keeping up with inflation, it’s worth understanding how the COLA works. We’ll break it down for you in this article. So, keep reading to learn about the three reasons your Social Security benefits might increase after you’ve claimed them.
Reason #1: Cost of Living Adjustments (COLA)
The COLA is a crucial factor in determining how much your Social Security benefits will increase. It’s based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which measures the cost of goods and services in the United States. When the CPI-W increases, the COLA kicks in, and your benefits are adjusted accordingly. For example, in 2020, the COLA was 1.6%, meaning that your Social Security benefits would increase by 1.6% starting in January 2020. However, if you’re already receiving benefits, you may be wondering how this affects you.
According to the SSA, your benefits won’t be retroactively adjusted for the COLA if you’ve already started receiving them. However, when the COLA is applied, your benefits will be adjusted based on your new monthly benefit amount. So, if you’re getting $2,000 per month, and the COLA is 1.6%, you’ll start receiving $2,026.10 per month from January onwards. As explained in a Social Security article about the COLA, payments can be checked by visiting the SSA website or contacting the local Social Security office.
Reason #2: Disability or Survivors Benefits Increase
While some people assume that Social Security benefits are solely for retired workers, the truth is that the Administration also provides disability and survivors benefits to eligible recipients. If you’ve applied for and started receiving disability or survivors benefits, you may be entitled to an increase. The SSA defines disability benefits as income for individuals who have become disabled and are no longer able to work. On the other hand, survivors benefits go to the spouse or certain family members of a worker who has passed away.
Unfortunately, not everyone qualifies for these benefits. According to the SSA, you need to have worked and earned a certain number of work credits, which are based on your age and income. In addition, you’ll need to accept that the SSA will review your disability every few years to ensure it continues to meet its criteria.
Reason #3: Taxation Changes or Refund Checks
Finally, your Social Security benefits might increase due to changes in tax laws or entitlement to a refund check. Although your benefits themselves are not taxed, depending on your income level and other factors, you may be able to claim a refund for some of your taxes paid on those benefits. In 2020, thanks to a change in tax law, many people were able to claim a refund check because their Social Security benefits were not subject to federal income tax.
According to the SSA, in 2022, seniors 65 or older will not have to pay federal income taxes on up to $39,000 of their Social Security benefits. This will lead to an increase in their take-home pay, especially if they were previously having to pay taxes on those very same benefits. You can visit the IRS webpage for a downloadable tax fix guide, which walks you through the updated information regarding tax free income.
In some cases, seniors who are claiming refund checks may find themselves with an increased Social Security benefit as well. After all, the more they take home in their refund, the less they are left paying out of pocket each month. With an increase in refund checks and savings for seniors, why shouldn’t their benefits see some increase as well?
This article wouldn’t be complete without pointing out that your benefits may also see an increase if certain of your family members are eligible for addition services and or additional monies. Be sure to inquire further about circumstances that might make you eligible.
