Social Security benefits are projected to increase by 10.5% in 2023

We never know for sure until the announcement by the Social Security Administration each October, but it looks like people receiving benefits will get a big raise in 2023. Experts are predicting a 10.5% cost-of-living adjustment (COLA). This is based on recent changes in the Consumer Price Index.

What would a Social Security benefits increase mean for your taxes?

Taxwise, this could be a mixed blessing for retirees. Here’s what else you need to know:

1. More benefits will expose more Social Security income to federal income taxes. Any joint return whose combined income (including Social Security income) exceeds $32,000 will trigger taxation of benefits. Also, higher income could also result in higher income-adjusted Medicare premiums.
2. Those premiums are already becoming costlier. This year, Medicare Part B premiums rose 15.5% — higher than the Social Security cost-of-living adjustment.
3. That means that some Social Security recipients who had Medicare premiums automatically deducted actually saw their monthly checks go down, despite the reported upward adjustment in benefits. Another big increase this year will eat into the higher benefits — or potentially eliminate them completely.

When was the last time Social Security benefits increased like this, and how much was the increase?

The last time Social Security benefits rose by double digits was 1981, when recipients received an 11.2% raise. Back then, the standard Medicare premium was $89 a month. For the source of these statistics and even more data on past benefits and Medicare premiums, check out the Social Security Administration’s Annual Statistical Supplement.

Talk to a ProVise CFP® professional about how an increase in Social Security benefits might affect you

At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance, and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.

Are you ready to talk to a professional about what an increase in your Social Security benefits means for you? Contact ProVise today to schedule a complimentary consultation.