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It’s no secret that inflation has been wreaking havoc on consumers since the later half of 2021. Inflation has disproportionately impacted seniors on Social Security.

Social Security benefits had a 5.9% cost-of-living adjustment, or COLA, at the beginning of 2022. That was the greatest increase seniors had received in decades at the time. However, it is apparent that it has not fared well in the face of rising inflation.

Seniors are eager to discover what their COLA will be in 2023 at this stage. The good news is that the wait will soon be over.

The Social Security Administration will make an official COLA announcement soon. Will seniors be pleased or dissatisfied with that figure?

Keeping expectations in check

Earlier this year, inflation was raging to such an extent that some analysts predicted an 11% Social Security COLA in 2023. At this moment, an increase of that magnitude seems doubtful. But that doesn’t mean seniors won’t be pleased with the final figure, which, based on the inflation we’ve seen so far, could easily wind up hanging around 9%.

Even if September’s inflation figures are lower than expected, seniors will almost certainly get a 2023 COLA in excess of 8%. When compared to the 5.9% increase they received at the start of 2022, there is a distinct difference.

In fact, seniors should keep in mind as they await the major announcement: a smaller COLA (between 8% and 9%) isn’t always a bad thing. If anything, it would indicate that inflation is finally beginning to fall and living costs are beginning to decrease. That alone should provide some relief to elders.

Furthermore, it is possible that inflation may continue to fall consistently following tomorrow’s COLA announcement. That would be excellent, because it would mean retirees could lock in a bigger increase while also seeing their living costs decrease. (It should be noted that any decrease in living costs would most certainly be gradual, but even a sluggish drop would be beneficial at this time.)

The increase for next year might go a long way.

Not only is the Social Security COLA for 2023 projected to be massive, but seniors should be able to keep it in full. What’s the reason? For the first time in years, the usual monthly Medicare Part B premium is decreasing.

Part B premiums are withheld from the benefits of seniors who are enrolled in both Medicare and Social Security. When Medicare Part B becomes more costly, which is typically the case, the increase cuts into any COLA that may be forthcoming. However, because Medicare Part B expenditures are expected to fall in 2023, seniors should benefit greatly from next year’s Social Security increase, regardless of the actual figure.

Author: Steven Sinclaire

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