For months on end, seniors on Social Security have been sitting on the edge of their seats waiting for news on next year's cost-of-living adjustment (COLA). With living costs soaring across the board due to inflation, many seniors -- especially those who get most of their income from Social Security -- are desperate for relief. And they're hoping an exceptionally large COLA will come through for them in the new year.
Now earlier on in 2023, some experts were calling for an upcoming Social Security COLA as high as 11%. At this point, that doesn't seem likely. Rather, it's more likely that seniors will see their benefits go up somewhere in the ballpark of 9% (and even that figure could change if September's inflation levels come in lower than expected).
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But all told, seniors should get a nice boost to their Social Security benefits in 2023. And thanks to one big Medicare change, that COLA will actually go further next year.
Medicare costs are actually dropping
Seniors who are enrolled in Medicare and Social Security at the same time have their Part B premium costs deducted from their benefits automatically. When COLAs are implemented but the cost of Part B rises, those increases eat away at seniors' raises. And unfortunately, Medicare Part B does tend to get more expensive from year to year.
But that's not what's happening in 2023. Rather, for the first time in years, the cost of Medicare Part B will actually be dropping.
Right now, the standard Part B premium is $170.10 per month (though higher earners pay more for Part B). Next year, the standard monthly Part B premium will fall to $164.90. So not only do seniors stand to save some money on their Medicare costs, but they also don't have to worry about a Medicare Part B increase eating up part of the COLA they're so desperate to get.
Incidentally, the annual deductible for Medicare Part B is decreasing in 2023, too. This year, it's $233, while next year, it's set at $226. That won't impact Social Security COLAs since deductibles are paid by seniors directly as they incur medical costs -- but it's yet another way seniors can expect Medicare to be less of a burden in 2023, thereby helping them get more out of their benefits.
COLA details should arrive soon
On October 13, the Social Security Administration is expected to announce details of next year's COLA, as well as other key changes to the program. Those are likely to include an increasing in the earnings-test limit, which applies to seniors who claim benefits before reaching full retirement age and work at the same time, and an increase in the wage cap for Social Security payroll tax purposes.
It will be interesting to see what the final COLA number looks like. But it's also fair to say that whatever the end result is, it will likely far surpass the 5.9% raise seniors on Social Security got at the start of 2022 -- a raise that, unfortunately, has since been rendered rather ineffective as inflation has soared.
