Introduction
Millions of Americans rely on Social Security for a stable income in retirement, disability, or survivorship. In one of the most notable updates to the program in recent years, the Social Security Administration (SSA) announced an 8.7% cost-of-living adjustment (COLA) — the highest increase in over 40 years. This bump, coming under the Trump administration’s economic oversight, significantly impacts the financial outlook for retirees and other beneficiaries.
But while the increase brings relief, it also raises questions: Who qualifies now? How will this affect monthly payments? Will taxes increase? In this article, we’ll explore the details of the 8.7% increase, who stands to benefit, how the qualification process works, and what changes may come next for Social Security.
Understanding the 8.7% COLA Increase
The 8.7% COLA (Cost-of-Living Adjustment) means that monthly Social Security payments for 2023 saw a significant rise, and its ripple effects extend into 2024 and 2025 for many recipients. This increase came as a response to historic inflation — with the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) showing sharp cost increases in essentials like food, energy, and rent.
What Does an 8.7% Increase Look Like?
Let’s break it down:
| Type of Benefit | 2022 Avg Payment | 2023 Avg After 8.7% COLA |
|---|---|---|
| Retired Worker | $1,681 | $1,827 |
| Disabled Worker | $1,364 | $1,483 |
| Retired Couple (Both Receiving) | $2,734 | $2,972 |
| Widow(er) | $1,567 | $1,704 |
This was the largest COLA since 1981, and it represents a direct effort to protect Americans on fixed incomes from losing purchasing power.
Why Was This COLA Implemented?
The Social Security Act mandates COLA adjustments to ensure benefits keep up with inflation. The Trump administration’s economic policies aimed to preserve Social Security benefits in real terms amid inflationary pressures caused by post-pandemic disruptions and global supply chain issues.
Key Drivers Behind the COLA Increase:
- Inflation: Food, housing, and fuel prices skyrocketed.
- Public Pressure: Seniors and fixed-income beneficiaries were hardest hit.
- Midterm Political Climate: Trump-era policies placed emphasis on senior welfare and program preservation.
Who Qualifies for the Increased Payments?
The 8.7% increase does not change the eligibility requirements for Social Security, but it does affect how much you’ll receive if you already qualify.
You Qualify If You Are:
1. A Retired Worker
- Must be at least 62 years old
- Have earned at least 40 credits (about 10 years of work) under Social Security
- COLA increase applies to current and future retirees
2. Receiving Social Security Disability Insurance (SSDI)
- Have a qualifying disability and a sufficient work history
- Payments are automatically adjusted
3. A Survivor (Widow/Widower or Dependent Children)
- Widow(er) benefits typically begin at age 60 (or 50 if disabled)
- Children under 18 (or under 19 if still in high school)
4. A Spouse or Dependent of a Retired or Disabled Worker
- A non-working spouse or spouse with limited work history may be entitled to up to 50% of the worker’s benefit
5. Receiving Supplemental Security Income (SSI)
- SSI recipients also received a COLA bump to their federal benefit rate
- This increase brings the 2023 individual monthly SSI maximum to $914, up from $841
How Do You Get the New Payments?
The best part? No action is required.
If you’re already receiving Social Security benefits, the COLA is applied automatically to your check starting in January of each year after it’s announced in October.
You should have:
- Received a notice from SSA in December detailing your new benefit amount
- Seen the increase in your January check
What About Taxes? Will You Owe More?
A larger Social Security check may push some recipients into a higher taxable income bracket — especially those with other retirement income like pensions, IRAs, or investments.
How Social Security Is Taxed:
| Filing Status | Combined Income | Taxation Rate |
|---|---|---|
| Single | $25,000–$34,000 | Up to 50% of benefits taxable |
| Single | Over $34,000 | Up to 85% of benefits taxable |
| Married (Joint) | $32,000–$44,000 | Up to 50% of benefits taxable |
| Married (Joint) | Over $44,000 | Up to 85% of benefits taxable |
Combined income = AGI + nontaxable interest + 50% of Social Security benefits
Many seniors will now fall into the 85% bracket due to the COLA bump, especially if they have modest retirement savings.
Impact on Medicare Part B Premiums
One piece of good news: the 8.7% COLA was not absorbed by Medicare increases in 2023. In fact, Medicare Part B premiums decreased slightly — a rare occurrence.
| Year | Monthly Part B Premium |
|---|---|
| 2022 | $170.10 |
| 2023 | $164.90 |
This meant beneficiaries kept more of their COLA increase, rather than losing it to healthcare premium hikes.
Social Security’s Future Under Trump’s Economic Vision
The Trump administration emphasized preserving Social Security while also floating ideas of payroll tax cuts and stimulus packages that raised concerns about long-term program solvency.
While no benefits were cut, critics warned that lowering the payroll tax (which funds Social Security) could destabilize the system in the long run. Nevertheless, Trump frequently promised to protect seniors’ benefits and increase access.
Proposals discussed under Trump:
- Raising the retirement age gradually
- Means-testing benefits for high-income earners
- Offering privatization options for younger workers (controversial)
How to Check Your Social Security Benefit Amount
You can view your updated Social Security benefit via:
1. Online My Social Security Account
- Visit: www.ssa.gov/myaccount
- Create or log in to see statements, earnings, and payment history
2. Benefit Statement (Form SSA-1099)
- Mailed annually in January
- Shows total benefits received in the prior year
What Should Beneficiaries Do Next?
1. Review Your Budget
With more money coming in, reassess monthly expenses, especially fixed bills like rent and medical.
2. Consider Tax Planning
The COLA increase may impact how much tax you owe next year. Consulting a tax advisor is a smart move.
3. Update Direct Deposit or Address
Log into your SSA account to ensure accurate delivery of payments.
Conclusion
The 8.7% COLA increase under Trump was a much-needed boost for millions of Americans who depend on Social Security. From retirees to disabled workers and widows, the raise helped cushion the blow of inflation and rising costs of living.
While the future of Social Security remains a politically charged issue, the commitment to adjusting benefits to maintain purchasing power ensures the program continues to serve its core mission: providing financial security to America’s most vulnerable.
If you’re eligible, the good news is your payment already reflects the new increase — and staying informed about taxes, Medicare costs, and your overall financial strategy can help you make the most of it.
FAQs
1. What is COLA and why did Social Security increase by 8.7%?
COLA stands for Cost-of-Living Adjustment. It’s designed to ensure Social Security benefits keep pace with inflation. The 8.7% increase for 2023 was driven by the sharp rise in consumer prices.
2. Do I need to apply to get the 8.7% increase?
No. If you’re already receiving Social Security, the increase is applied automatically to your check.
3. Will my taxes go up because of the increase?
Possibly. If your combined income exceeds certain thresholds, a larger portion of your Social Security benefit may become taxable.
4. Did Medicare premiums go up with the COLA?
No. In fact, Medicare Part B premiums decreased slightly in 2023, allowing beneficiaries to retain more of their COLA increase.
5. Can new applicants benefit from the COLA increase?
Yes. If you become eligible and begin receiving benefits in 2023 or after, your payment will reflect the updated COLA-adjusted amounts.