Get more money and pay out less. That's a scenario every retiree would like. And it's what's in store for next year in two important ways.
Social Security monthly benefits are increasing. Medicare Part B premiums are decreasing. Here's how much the average retiree will receive from Social Security and pay for Medicare Part B in 2023.
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A Social Security COLA pop
You've probably heard by now that the Social Security Administration (SSA) announced a cost-of-living adjustment (COLA) of 8.7% on Thursday. This is the biggest increase since 1981. Retirees will see the additional money in their monthly checks beginning in January 2023.
How much will the average Social Security check for retirees be? SSA reported that the average monthly benefit for retired workers in September was $1,673.88. Adding another 8.7% to that amount results in a monthly total of $1,819.50.
Family members of retirees who receive Social Security benefits will also enjoy a nice raise. In September, the average monthly Social Security check for spouses of retirees was $831.81. Beginning next year, that amount will increase to $904.18.
Around 674,000 children of retired workers are Social Security recipients. The average monthly benefit for these individuals in September was $785.75. This average will jump to $854.11 in 2023.
Medicare gives back
Retirees were hit especially hard earlier this year with Medicare Part B increases. The standard monthly premium soared 14.5% from the 2021 level to $170.10.
However, Medicare is giving that increase back in 2023. The standard monthly Medicare Part B premium for 2023 will fall by $5.20 to $164.90. To add icing to the cake, the annual deductible for Medicare Part B will decline by $7 to $226.
It's practically unheard of for Medicare premiums to decrease. What's going on? The big bump in 2022 was due in large part to the anticipated higher costs for the Medicare program from Alzheimer's disease drug Aduhelm. Those costs didn't materialize as originally expected.
Earlier this year, the Centers for Medicare and Medicaid Services (CMS) decided not to provide reimbursement for Aduhelm in most cases. The agency looked at the possibility of returning the increase in premiums to Medicare Part B enrollees sooner but couldn't figure out a way to make that happen. As a result, the 2023 premiums will be lower than they were in 2022.
Good -- but not great -- news
More money coming in from Social Security and less going out to Medicare Part B is good news for retirees. However, it's not great news.
The biggest problem with the huge Social Security increase is that it could be too little and too late. Retirees have already incurred higher costs due to skyrocketing inflation this year. The COLA that will impact Social Security checks beginning in January will help going forward but won't offset those increased expenses.
There's a similar issue with the lower Medicare Part B premiums. It's certainly a positive development for retirees' monthly payments for Medicare Part B to decrease. But they've had to shell out a lot more each month for premiums throughout 2022 when the extra money would have been especially helpful.
The news might not be as great as it could be, but there's a reason for optimism. The bottom line is that 2023 appears to be shaping up to be a better year for retirees than 2022 has been.
