Once again, TSCL is being quoted in a number of media outlines regarding its forecast of the 2023 Social Security COLA.
Among them is Yahoo Finance, which said this: “Based on new inflation data through June, the cost-of-living adjustment for Social Security benefits, or COLA, could be an increase of 10.5% next year, according to estimates from the Senior Citizens League, boosting the average retiree benefit by $175.10 every month.”
However, the article pointed out that a larger COLA is not all good news for seniors. The COLA will not go into effect until January of next year. In addition, it is likely a Medicare Part B increase will take a large portion of the new COLA. And it could push certain seniors into a higher tax bracket resulting in increased taxes and/or a reduction in some benefits.
Quoting TSCL’s Social Security Policy Analyst Mary Johnson, the article pointed out that “A bigger Social Security benefit translates to higher income, which can mean higher taxes for those with incomes above $25,000 for individuals and $32,000 for married couples, according to Johnson. Tens of thousands of retirees who have not paid taxes on their benefits in the past may discover they must start doing so in 2023.
“‘Because the income thresholds are not adjusted like ordinary tax brackets, these once-in-a-lifetime COLA increases could lead to permanently higher taxes for many retirees,’ Johnson said.
“Higher income can also result in cuts in income-related benefits for low-income seniors, Johnson said. A May-June survey from the Senior Citizens League found that 39% of participants who receive low-income benefits reported their low-income assistance was reduced due to this year’s 5.9% COLA, while 15% reported they lost access to at least one assistance program.
“‘The most cruel irony is that a high COLA can lead to trims in income-related benefits such as SNAP and rental assistance for low-income beneficiaries,’ Johnson said.”