Social Security recipients will be getting a big bump in their monthly payments next year, thanks to the highest cost-of-living adjustment in decades. This means seniors who haven’t yet filed for benefits might be tempted to do so now — but doing so could cost you money over the long term.

                By                    Vance Cariaga

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The longer you delay collecting Social Security, the higher your monthly payment. Even though the 2023 COLA of 8.7% will add more than $140 a month to the average payment, you are probably still better off waiting as long as you can to collect.

Even if you don’t collect benefits now, the 8.7% COLA will still factor into the amount you’re eligible to receive starting at age 62, The Washington Post reported. The adjustment gets compounded every year, so if you wait until full retirement age or later, your monthly payment will grow even more. The increase stops when you reach age 70.

The advantages of waiting to collect Social Security have been well-documented, but in case you are new to all this, here’s a quick primer:

The benefit you receive is based on a primary insurance amount, or PIA, according to the Social Security Administration. The PIA, in turn, is directly related to the primary beneficiary’s career earnings through a benefit formula, and it’s the PIA that is increased by the COLA.

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As the SSA notes, if you retire before your normal retirement age — the age at which retirement benefits (before rounding) are equal to the PIA — then your benefit will be lower than your PIA. But if you retire after reaching normal retirement age, your benefit will be higher than your PIA.

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When you factor in the compounding effect of the high 2023 COLA — not to mention subsequent adjustments in future years — waiting to collect your Social Security benefits can boost your payment even more.