Social Security and Medicare 2023 Cost Of Living Adjustment, #120
There’s a new cost of living adjustment for both Social Security benefits and Medicare! But what does it mean? And how will these changes impact your retirement? On this week's episode, I'm going to address the recent announcement from Social Security regarding the 2023 cost of living adjustment and answer a listener's question on signing up for Medicare while using COBRA insurance.
You will want to hear this episode if you are interested in...
How Social Security cost of living adjustments are determined [1:22]
Cost of living adjustments for Medicare [3:42]
What is the Social Security Wage Base Cap? [6:34]
COBRA or Medicare: What should you choose? [8:48]
Understanding cost of living adjustments for Social Security benefits
Every year, the Social Security Administration (SSA) performs a cost of living adjustment (COLA) for Social Security benefits. The SSA uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPIW) to determine the adjustment. They take the average of the indexes for July, August, and September, and then subtract the average for the same period from the previous year. That is how the recently announced 8.7% increase in Social Security benefits was formulated. Thankfully, you don’t have to wait to get your statements to find out how this impacts your benefits. Simply go to SSA.gov and log in or create an account to view the changes.
Additionally, if you are not yet collecting Social Security benefits, the COLA will not show up directly on your statements. Rather, when your Social Security benefit is calculated annually, it will be increased by the cost of living adjustment so that when you actually claim your benefit, they will be adjusted for this increase. If you’re still planning to delay your benefit, then any future cost of living adjustments will increase the amount you could receive.
How cost of living adjustments impact Medicare
Aside from Social Security benefits, Medicare beneficiaries also received a cost of living adjustment. The base premium for Medicare Part B actually decreased to $164.90 from last year’s $170.10. Usually, when we have inflation, there's an increase in Social Security benefits, but the cost of Medicare goes up as well. This Medicare decrease is a welcome relief for retirees struggling to keep up with the current rate of inflation.
Another facet of this Medicare announcement is a change to the income-related monthly adjustment amount (IRMA). This is the additional amount you may have to pay on top of the standard Medicare Part B premium if your income exceeds a certain level. For this year, single filers will have to pay the surcharge if their income is over $97,000 (up from $91,00), and joint filers will have extra fees with an income over $194,000 (up from$182,00). They also announced that the maximum amount for this surcharge is $395.60 per month per person for Medicare Part B. Listen to this episode for more on the Social Security and Medicare cost of living adjustments!
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