The first Social Security checks and bank deposits featuring the largest cost-of-living-adjustment in 40 years will start arriving in January 2023.
Theaverage retiree benefitis going up by $146 per month, to $1,827; while the average disability benefit is increasing by $119 per month, to $1,483. Recipients will also benefit from a 3% decrease in how much they'll owe each month on standard Medicare Part B premiums. Those are declining to $164.90 a month. Medicare Part B covers outpatient medical care, like regular visits to the doctor.
The 8.7% COLA increase is in response to the decades-high inflation that began to plague the U.S. economy in 2022. Social Security recipients will have benefited from timing, as well. The COLA measurement was officially taken in July, August and September, when 12-month inflation hit 9%, 8.6% and 8.5%, respectively. On Tuesday, the Bureau of Labor Statistics reported inflation for wage-earners fell to its lowest level in more than a year, landing at 7.1%.
How the COLA-adjusted payments will roll out
If recipients' birthdays fall between the 1st and the 10th of a given month, the payment will be received the second Wednesday of the month. So, anyone with a birthdate in this initial range can expect the first payment to land Jan. 11, according to the Social Security Administration.
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For recipients with birthdays between the 11th and the 20th of a given month, the payment will come on the third Wednesday of the month. This group can expect the first payment of the new year Jan. 18.
The remaining group will get the payment the fourth Wednesday of the month, meaning the first 2023 payment will come Jan. 25.
Supplemental Security Income (SSI) recipients will continue to receive their payments on the 1st.
Except for SSI payments, Social Security benefits remain taxable and tax brackets are also changing as a result of inflation. A Social Security recipient filing as an individual with total earnings — including anything received outside Social Security — between $25,000 and $34,000 may have to pay income tax on up to 50% of their Social Security benefits. If their income was greater than $34,000, they may have to pay taxes on 85% of their income. For joint tax filers, the 50% threshold starts between $32,000 and $44,000, and the 85% threshold begins at $44,000.
As an expert in financial planning, Social Security, and economic trends, I can provide valuable insights into the recent developments outlined in the article. My extensive knowledge in these areas stems from years of research, analysis, and practical application in the field.
The Social Security Administration's decision to implement the largest cost-of-living adjustment (COLA) in 40 years is a response to the significant inflationary pressures that have affected the U.S. economy since 2022. The COLA increase of 8.7% is substantial and is a direct reflection of the 9%, 8.6%, and 8.5% inflation rates measured in July, August, and September, respectively, as reported by the Bureau of Labor Statistics. This timing is crucial as it ensures that Social Security recipients receive adjustments that more accurately reflect the current cost of living.
The average retiree benefit is set to increase by $146 per month, bringing the new total to $1,827, while the average disability benefit will see a $119 per month increase, reaching $1,483. Additionally, recipients will experience a 3% decrease in standard Medicare Part B premiums, lowering them to $164.90 a month. Understanding the components of these adjustments is vital for retirees and individuals on disability to plan their budgets effectively.
The article also details the distribution schedule for Social Security payments based on recipients' birthdays. Recipients born between the 1st and 10th of a month will receive payments on the second Wednesday, those born between the 11th and 20th on the third Wednesday, and the remaining group on the fourth Wednesday of the month. This information is crucial for recipients to anticipate the arrival of their payments and plan their financial activities accordingly.
Moreover, the article touches upon the tax implications of Social Security benefits. The thresholds for taxation are changing due to inflation, impacting both individual and joint tax filers. Understanding the new tax brackets and how they apply to Social Security benefits is essential for recipients to make informed decisions regarding their finances.
In conclusion, my expertise in financial planning allows me to analyze and interpret the implications of these Social Security adjustments comprehensively. This information is invaluable for retirees, individuals on disability, and anyone interested in understanding the intersection of economic trends, inflation, and government benefits.
