The Social Security COLA: Everything you ever wanted to know, and then some
The final figure will be announced on Thursday.
Later this week, Social Security will announce the largest inflation adjustment to benefits in four decades. With public interest in the story running very high this year, I have a story online this morning at The New York Times website that answers a range of questions you might have about the program’s cost-of-living adjustment (COLA) - and perhaps some questions you haven’t asked yet.
The list includes:
Why will this year’s COLA be so high?
Is the COLA formula an accurate measure of inflation for retirees?
If Social Security is adjusted for inflation, why do people always say retirees live on fixed incomes?
Do all seniors experience inflation in the same way?
Why is there so much interest in the COLA?
I haven’t claimed Social Security yet. Have I missed the boat on next year’s big COLA?
Does everyone get the full COLA?
What happens when the Medicare Part B premium increase is larger than the COLA?
How about prescription drug costs? Those take a bigger bite out of benefits, too.
Will a large COLA affect my taxes?
Has there always been an annual COLA?
Does Social Security make any other adjustments to reflect inflation?
How are Social Security benefits funded, anyway? How do we pay for all this?
Will higher benefit payments increase Social Security’s future shortfalls?
The COLA for 2023 will be announced on Thursday, and it is likely to be around 8.7 percent. Medicare enrollees can anticipate some additional good news: The standard Part B premium, which is typically deducted from Social Security benefits, will decline next year.
I’ll have another update later in the week after the final COLA figure is announced.
What I’m reading
How insurers have exploited Medicare for billions . . . Six trends that upend thinking about retirement planning . . . Tax secrets of Health Savings Accounts . . . Americans tap 401(k) accounts following natural disasters . . . Fund managers wrestle over plans to tighten ESG rules . . . The pandemic’s legacy is clear: all of this will happen again . . . Many of Hurricane Ian’s victims were older adults who drowned.