It’s a classic good news/bad news situation. The Social Security cost-of-living adjustment (COLA) for 2023 will be 8.7%, the most since 1981. What prompted it is the bad news. Inflation climbed faster than expected—0.4% in September—and is 8.2% year to date.

Your clients’ reactions to today’s highly anticipated COLA news depend on where they are in the retirement spectrum. Here are five of the types of clients I encounter in my work with daily helping advisors chart Social Security filing strategies—and my advice on how to put the COLA news in context for their clients.  

1. Retired and collecting Social Security. Your message to this group is straightforward: In January, they’ll get an increase in their Social Security benefit paid by check or, more likely, direct deposit. It probably won’t equal 8.7% because of other adjustments, such as Medicare Part B premiums or income taxes they’ve authorized to be withheld.

The Social Security Administration (SSA) will notify them by mail (or electronically if they’ve opted out of mail notices) about their new benefit amount in December. They also can sign into their account at later this year to find it.

Circling back to income taxes: The COLA will nudge some individuals and couples into higher tax brackets, which could come as a surprise. Now is the time to do a 2022 tax review with clients and their accountants to prepare for filing after Jan. 1, 2023.

2. Retired but haven’t filed for Social Security. Many of these clients, I’d wager, are waiting to file for Social Security benefits until they reach full retirement age (FRA) or even later—perhaps at 70, when they can claim the maximum benefit.

The COLA announcement affirms their sound choice. When they file, their benefit will be calculated, increased by the sum of all the COLAs since they turned age 62, and adjusted based on the benefit they’re filing for.

Some clients may interpret the COLA news as a message from heaven to file earlier than they had planned. Urge them to sit down with you before they do anything. Use your advanced Social Security modeling software to show them the effects of filing sometime soon, or later, when they’d planned. The benefits of deferring can exceed six figures for some.

This is particularly important for married couples. A widowed spouse’s financial security may hinge on intelligent choices now to maximize survivors’ benefits. Oddly, it can even affect the benefits available to a divorced spouse.

3. Working—or thinking about returning to work—and collecting. Many of these clients have reached their Social Security full retirement age (FRA) and are exempt from any limits on how much they can earn and still collect their benefits without penalty.

Anyone under their FRA (or what the SSA also calls the “normal retirement age”) will receive the COLA on their benefit and be able to take advantage of an increase in how much they can earn before some of their Social Security benefits are withheld.  

Of course, some may decide that they’d rather lose some benefits now if they can earn more to help pay the rising costs of fuel, food, rent and healthcare, including prescription drugs. They look for a better-paying job, or they “unretire.”


You can tell them that once they stop working or reach their FRA, Social Security will recalculate their benefits to include those they temporarily lost. They don’t get a lump sum repayment, however. Social Security recalculates their monthly benefit based on their projected lifespans.    

4. Working but hoping to retire soon. This is, perhaps, the group you need to work hardest at helping come to terms with what inflation, lower prices for both stocks and bonds, and possible recession mean for their plans. My colleague, Paul Samuelson, would advise most to defer retirement and keep working so they can:
• Potentially increase their monthly Social Security benefits when they file and the benefits available to surviving spouses after their deaths.

• Put away more money (perhaps with employer matches) in tax-advantaged accounts like 401(k)s and individual retirement accounts (IRAs), padding their retirement cushions.

• Steel their financial situations against whatever future economic downturns are in store.

5. Working—and likely to be so for a while. These are clients in their 50s and early 60s, working, earning, investing and probably holding their hands in their heads whenever they check their account summaries. They may ask you,  “Will I ever be able to retire?”

Naturally, you’ll refocus them on the financial plan you built together and the proven benefits of long-term, tax-smart investing. You’ll remind them that many people were bereft in 2008 and 2009, only to benefit from the bounce in stock prices that followed the Great Recession.   

The COLA announcement can be a reminder that once they file for Social Security benefits, there is some protection built into the system should inflation eat into their budgets again.

Alyson Dorosky, CSSCS, is head of Social Security support at LifeYield. She works with advisors and clients to address their thorniest Social Security issues.