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Social Security Recipients are in Store for a Nice Raise!

Posted by Deborah Brown Ferguson, November 3, 2022

Times aren’t exactly easy for those living on a fixed income, such as retirees who depend upon Social Security and their retirement savings. But we do have some good news. Beginning in January, Social Security beneficiaries will receive one of the largest-ever cost of living increases (COLA).

In January, Social Security checks are set to rise by 8.7 percent – the largest cost of living increase since 1980!

Social Security beneficiaries will see this increase on their first checks of the new year.

Since cost-of-living increases are based upon each year’s Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), the goal is to help retirees keep their budgets in line with current inflation figures. But it’s important to note that the CPI-W does track expenses that impact urban wage earners, which might not line up exactly with expenses most common to retirees.

For example, the cost of gas might impact you less, because you don’t commute to work anymore. But the cost of healthcare generally impacts you more after age 65. And of course, housing and food impact everyone.

Another issue to remember is that some retirees do pay taxes on their Social Security benefits, because their overall taxable income rises above certain thresholds. Talk to your tax professional if you’re close to those thresholds already, because a few of you might find that you cross into a new tax bracket.

Whether or not this COLA helps you enough will depend upon your own lifestyle and budget. But for most, any cost-of-living increase in checks is a welcome one. And if you need help budgeting for the cost of your healthcare, remember we are here to consult with you about your Medicare plan(s).

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