There’s been a lot of coverage around the historically high cost-of-living-adjustment, or COLA, for Social Security benefits for 2023. One matter that has been confusing people is just how this increase affects their benefit — do they have to be receiving a benefit in order to get the COLA? Here’s an example from an email I received recently:
I turn 70 in March 2023. I’ll receive the full 32% increase in delayed retirement credits. Social Security benefits for all current recipients are going to increase 8.7% in 2023. Wouldn’t it be advantageous to me to sign up for my benefit starting in November 2022? I would receive my first check in December 2022 with a reduction of 2.67% for the earlier start date of November 2022 vs. March 2023, resulting in delayed retirement credits of 29.33%. But, in January 2023, my Social Security check would be increased by 8.7%, offsetting the 2.67% loss for earlier start date, resulting in a net increase overall of 6.03% by starting in November 2022 vs. March 2023. Does this seem like a good strategy to adopt given the large increase approved for 2023? It is not necessary to apply for benefits prior to the beginning …