Social Security serves as a critical income source for millions of seniors. Now that we're in the final quarter of 2022, a lot of people are eager to learn about changes to the program that may be in store for 2023.
We'll have to wait until October 13 to get certain specific updates. But here are three pieces of positive news we can point to already.
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1. Next-year's raise should be huge
We won't know what 2023's Social Security cost-of-living adjustment (COLA) will look like until mid-October, as it hinges on having a complete set of third-quarter inflation data. But based on what we know so far, it's fair to say that next-year's COLA will be the largest one in decades.
At the start of 2022, benefits rose by 5.9% to account for an uptick in inflation levels. But this-year's rate of inflation has far surpassed last year's -- hence, the much larger COLA.
Earlier in the year, some experts were predicting as much as an 11% raise for seniors on Social Security in 2023. That's probably not happening. But is a raise in the vicinity of 9% possible? Absolutely.
2. Medicare Part B premiums won't eat into next-year's COLA
Last-year's positive news of a 5.9% COLA was offset by the announcement that the standard Medicare Part B premium would be rising from $148.50 in 2021 to $170.10 in 2022. Seniors who are enrolled in both programs have their Medicare Part B premiums deducted from their Social Security benefits directly.
But this year, seniors don't have to worry about a repeat scenario. Medicare recently announced that the standard Part B premium in 2023 will actually be lower than what it was in 2022 -- $164.90. As such, it's looking like seniors on Social Security will actually get to keep their COLAs, rather than lose a portion of it to Medicare Part B costs.
3. The earnings-test limit should rise
Seniors on Social Security can work and collect benefits at the same time. But they can also run into trouble once their income exceeds a certain threshold, because at that point, there's the potential for some of their Social Security income to be withheld.
To be clear, this only applies to seniors who are collecting benefits and haven't yet reached full retirement age. Once full retirement age kicks in, earnings don't impact benefits whatsoever.
The earnings-test limit, which dictates how much seniors can earn before withheld benefits come into play, tends to rise from year to year to account for factors like inflation and wage growth. Next year, seniors should have more leeway to earn money before their benefits are impacted.
It's happy news all around
Many Social Security recipients have struggled this year in the wake of inflation, so the combination of a giant COLA without a Medicare Part B hike is definitely welcome news. While a higher earnings-test limit may not impact as many seniors, the fact that it should be possible to earn more money without worry is a good thing at a time when living costs are soaring.
