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social security beneficiary Pension plans are expected to grow by 8.7% in 2023.
Known as the Cost of Living Adjustment (COLA), this increase is the largest since 1981 when recipients jumped 11.2%. This adds about $140 to your average monthly profit.
According to the Social Security Administration, the more than 66 million Americans who collect Social Security will receive more payments starting in January.
higher payment hottest inflation 40 Years Later: Prices paid by US consumers hovered around the 40-year high between August and October, when the COLA is calculated.
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“It’s unusual to see a Social Security cost-of-living adjustment of 8.7%. Enjoy it now,” said Mary Johnson, a senior Citizens League policy analyst. This is the first and possibly the last time I will receive it.”
Still, according to Johnson, decades of increasing benefits aren’t necessarily good news for beneficiaries.
Higher Social Security payments are a bit of a catch-22.They reduce eligibility for low-income safety net programs like food stamps, higher tax amountIn essence, bigger payouts don’t necessarily bring more money into people’s pockets.
social security benefits be taxed Half of your benefits plus all other income, including tax-exempt interest, exceeds $25,000 if you are single, head of household, or eligible widow, or $32,000 if you are married.
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Some seniors may not be obligated to pay taxes on their benefits at all, but that could change when they file their tax returns next year. In fact, the Congressional Budget Office estimates that the share of taxable Social Security benefits will increase by 10% this year, and could increase another 10% by 2023. Year.
Moreover, the Social Security Trust Fund is estimated to receive more than $45 billion from taxable benefits in 2022. According to program trustees.
“A high-inflation COLA can have very long-term effects,” Johnson said. “It’s like a no-win situation.”
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Higher monthly incomes can also make older people less eligible for low-income programs such as SNAP, supplemental nutrition assistance programs (food stamps).
Benefits will increase by 5.9% in 2022, an average monthly increase of $92 for retired Americans, for a total of $1,657, the Social Security Administration announced last year.
soaring inflation However, according to Senior Citizens League calculations, recipients lost 46% of their purchasing power for the year (about $508) each month, and have already lost all their gains.
In addition, an abnormally large COLA could drive up the Social Security bankruptcy date by depleting funds faster.
To maintain the same level of purchasing power as in 2000, retirees would need to increase their average monthly earnings by $417.60.
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