woman-on-laptop-homepage

Retirees to Receive Historic Social Security Pay Raise

Loren Merkle, CFP®, RICP®, Certified Financial Fiduciary

Social Security beneficiaries are getting a historic benefit increase. The Social Security Administration announced today that they will receive an 8.7% cost-of-living adjustment (COLA) starting in 2023. The average Social Security retiree benefit will increase $146 per month, to $1,827, from $1,681 in 2022. This is the largest COLA increase since 1982.

There are only three other times since the start of the automatic adjustments that the COLA increase was higher. The highest ever was the 14.3% increase in 1980. The 2022 5.9% bump was the largest since 1982’s 7.4% increase.

The historic COLA is a result of rising inflation. The consumer price index rose 8.3% in August from a year earlier but is easing from a 40-year high of 9.1% in June.

The annual COLA is based on a comparison of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter (July through September) of the previous year to the third quarter of the current year. The CPI-W is a monthly measure of the average prices of goods and services. More than 200 items are taken into account. The eight major categories are food and beverage, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services (smoking products, haircuts, and personal services).

Roughly 70 million people receive Social Security benefits. Beneficiaries can expect to see the 2023 COLA in their benefit checks starting in January.

Medicare premiums are going own

Most people have their Medicare Part B premium deducted directly from their Social Security benefits checks. Medicare premiums are going down in 2023. The standard Part B premium will drop by 3% to $164.90. That’s $5.20 lower than 2022. The annual deductible for Part B will be $226 in 2023, a decrease of $7 from $233 in 2022. It’s exciting to see these costs decrease after what Medicare recipients experienced in 2022. The standard Medicare Part B premium jumped $21.60 from 2021 to 2022 due to Medicare’s project spending on Aduhelm, a drug that battles Alzheimer’s. But spending was lower than expected on that drug and other Part B items and services, resulting in larger financial reserves for Part B and ultimately reduced costs to you – the Medicare beneficiary.

IRMAAs (income-related adjustment amounts) are changing for 2023. These numbers impact your Part B and Part D premiums. If you are single, IRMAAs will kick in at a modified gross income adjustment of more than $97,000, up from $91,000 in 2022. For married beneficiaries filing a joint tax return, the extra monthly charge will apply if income is above $194,000, up from $182,000 this year.

What if you haven’t claimed benefits yet

The annual COLA is applied to your benefit amount, even if you have not yet claimed Social Security, beginning the year that you become eligible (age 62). If you’re 62 now and don’t claim, your benefit is adjusted by every COLA until you claim your benefit.

Source: CNBC.com

Elections and Your Retirement | Managing Market Uncertainty

May 19th, 2024

In this episode of Retiring Today, Elections and Your Retirement, we dive into […]

Read More

Early Retirement Strategies | 8 Reasons to Leave the Workforce Sooner

May 12th, 2024

In this episode, Retirement Planners Clint Huntrods and Loren Merkle delve into the […]

Read More

Simplifying Tax Strategies For Your Retirement

May 5th, 2024

Discover simple yet effective tax strategies for retirement.  – Understanding the massive scope […]

Read More

How to Combat Inflation for a Secure Retirement Lifestyle

April 28th, 2024

Facing the challenges of inflation can be daunting, especially as you plan for […]

Read More

Retirement Strategies | How to Stop Leaving Money on the Table

April 21st, 2024

Don’t leave retirement money on the table due to taxes! We’re diving deep […]

Read More

Maximizing Your Social Security | Strategies for a Smart Election

April 14th, 2024

Navigating Social Security benefits can be daunting, especially when you’re on the cusp […]

Read More

Navigating Retirement | A Couple’s $12 Million Lesson

April 7th, 2024

Discover how to navigate the complexities of retirement planning with Retirement Planners Loren […]

Read More

Retirement Planning | Why It’s Not an Easy Set It and Forget It Scenario

March 31st, 2024

We look at why you can’t simply “set it and forget it” when […]

Read More

Navigating Your Financial Future When Your Advisor Retires

March 24th, 2024

Navigating the transition when your financial advisor is heading into retirement can be […]

Read More

Essential Legacy Planning Documents for a Secure Retirement

March 17th, 2024

Retirement Planner Loren Merkle discusses the critical topic of legacy planning and retirement. […]

Read More

Ready to take your retirement to the next level?

Let's chat! Schedule a RetireReady Call to talk with a retirement planner about your retirement vision.

Ready to take your retirement to the next level?

Let's chat! Schedule a RetireReady Call to talk with a retirement planner about your retirement vision.

Call Now Button