The slight decrease in inflation announced Wednesday, from 9.1% in June to 8.5% in July, is likely to bring down 2023’s Social Security cost-of-living adjustment (COLA) as well, to 9.6%.
Last month, the Social Security Administration was planning to give seniors a 10.5% boost. That would have brought the average Social Security recipient’s benefit up by $175 to $1,668 a month.
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That’s now likely to be slightly smaller: a $159 bump to $1,656 a month, Barron’s reports, citing estimates by the Senior Citizens League.
Even if the COLA is just 9.6%, Social Security recipients are in line for the biggest raise in more than 40 years in 2023.
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The Social Security Administration will announce the COLA in October, basing it on the average consumer price index for the third quarter of 2022.
This year, Social Security raised the COLA by 5.9%. While the 51 million Social Security recipients were undoubtedly happy for the increase, it has not kept up with inflation, forcing many seniors to tap into their savings to cover such essentials as gas and food.
Whatever 2023’s COLA turns out to be, it could push many seniors into the IRS bracket that taxes as much as 50% of income, including Social Security, for individuals earning more than $25,000 a year, and couples, $32,000.
What’s more, that tax rises to as high as 85% of income for Social Security recipients and others earning more than $34,000 a year, and couples, $44,000.
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