Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Illustration of Social Security card saying COLA: Since 1975

Retirement Planning > Social Security > Claiming Strategies

The 2023 Social Security COLA Is Almost Here. What Advisors, Clients Should Know

Your article was successfully shared with the contacts you provided.

What You Need to Know

  • Clients do not have to take action to receive the 2023 COLA, nor do they have to be actively collecting benefits.
  • The COLA could be an important “sleeper factor” that helps to steer the U.S. economy away from recession in 2023.
  • Generally, it is better for clients to wait as long as possible before claiming Social Security.

In less than a week, the near-record 8.7% Social Security cost-of-living adjustment (COLA) will take effect, and combined with an anticipated reduction in both Medicare Part B and D costs, the typical Social Security beneficiary will see their net check grow by nearly 10%.

According to Jeff Levine,’s lead financial planning nerd and also Buckingham Wealth Partners’ chief planning officer, there remains a lot of educating for advisors to do with respect to the incoming COLA and Social Security in general.

For example, ever since the first hints of a near double-digit COLA surfaced this summer, near-retirees have been anxious that they could miss out on this increase if they haven’t already claimed benefits. This is untrue, of course, but it is nonetheless a pervasive narrative among the uninformed.

Taking once again to Twitter this week in his usual style, Levine said there are a few key messages advisors should be ready to deliver to their clients as the COLA sets in, beginning with the aforementioned reminder that the COLA is being “baked in” to the normal benefit calculation. As such, all COLAs, including the 2023 COLA, automatically apply each year after one’s official primary insurance amount is calculated at age 62.

“Clients do not need to claim early to get the benefits of the annual COLA,” Levine says.

Responding to one advisor’s question, Levine also pointed out that the big 2023 COLA does not affect Medicare Part B premium rates. That is why, even though the Social Security COLA is “only” 8.7%, the average net check will increase by even more — closer to 10%.

“Even after inflation, Medicare Part B/D costs are going down [for most people] in 2023,” Levine says.

Other commenters posited that the COLA could be an important “sleeper factor” that helps steer the U.S. economy away from recession in 2023 — an outcome that has been predicted by many asset managers.

Overall, according to Levine and other experienced financial planning professionals, one of the most useful pieces of information to convey to clients right now is the virtue of delaying Social Security benefits. Broadly speaking, the vast majority of today’s workers who are nearing retirement could benefit from waiting beyond their full retirement age to collect Social Security.

In fact, one recent analysis from the National Bureau of Economic Research shows more than nine out of 10 people should wait till age 70 for optimal claiming. According to the research, delaying could produce a 10.4% increase in the typical worker’s lifetime spending capacity.

Another key fact to point out is that the 2023 Social Security COLA is already being used by scammers and fraudsters to steal information from unwary clients. According to the Social Security Administration, in late 2022, scammers are primarily calling to contact clients, but they may also use email, text messages, social media or physical mail. Increasingly, fraudsters are calling people to “verify information about the 2023 cost-of-living adjustment for people who get benefits.”


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.