Every now and then, you might notice a bit of extra money in your Social Security benefits. This can be due to several reasons, such as a Cost of Living Adjustment (COLA), back payments, or error corrections. This article will explore some of these possibilities to help you understand why you might have received extra money from Social Security this month.
Cost of Living Adjustments (COLAs)
One of the most common reasons for an increase in Social Security benefits is the Cost of Living Adjustment. COLAs are implemented to ensure the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation. The COLA for the upcoming year is typically announced in October, based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If there’s an increase, it takes effect in December for Social Security benefits and in January for SSI benefits.
Back payments, or retroactive benefits, are another reason you may receive extra money. This usually happens when there’s a delay in processing your claim. If your claim is approved after several months of filing, Social Security will owe you benefits dating back to when you first became eligible. This lump sum is often paid separately from your regular monthly benefit.
Mistakes can sometimes happen in the administration of Social Security benefits. If the Social Security Administration (SSA) discovers they have underpaid you in the past, they will correct the error and pay the difference, resulting in a one-time larger payment.
In certain circumstances, a portion of Social Security benefits may be taxed. If you’ve withheld taxes from your benefits and later file a tax return showing you don’t owe as much as you’ve paid, you could receive a tax refund, either from the IRS or as an adjustment to your benefits.
Increased Work Credits
If you continue to work while receiving Social Security benefits, your monthly benefit amount could increase. This happens if your recent earnings are among the highest in your earnings record, which is used to calculate your benefit amount.
If you’ve noticed extra money from Social Security this month, it could be due to any of these reasons. However, it’s always a good idea to verify the source of any unexpected increase in your benefits. You can check your Social Security account online or contact the SSA directly for clarification. If it turns out to be an error, reporting it promptly can help avoid potential issues down the line.