Social Security is getting ready to announce the Cost Of Living Increase in October.
Each year, usually in October, the Social Security Administration announces the cost-of-living adjustment (COLA) increase for the following year. With the Consumer Price Index (CPI) for September 2022 set to be released on Oct. 13, the COLA should be announced around that same time.
According to the Social Security Administration website, COLA increases are based on the CPI for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the prior year. COLA increases are rounded to the nearest one-tenth of 1%. The CPI for July was 9.1%, the first of three months that will determine the COLA for 2023.
Experts are predicting the 2023 COLA could be as high as 10% or more. That would be the biggest increase since 1981 when the COLA hit 11.2%, AARP.org wrote. Due to inflation Americans on a fixed income will be thrilled to receive more money in their checks. Millions of Senior Citizens have voiced their concerns about being left out of different states' stimulus checks even though the state was sitting on a record-breaking surplus. The question is will a large COLA increase help offset high gas and food prices for those on a fixed income?
Mary Johnson of the Senior Citizen League’s Social Security and Medicare policy analyst said a large COLA increase could negatively impact some Americans. “Thousands of retirees who have not paid taxes on their benefits in the past might have to start doing so.” The reason is that a sharp COLA increase would push some Social Security beneficiaries into directly into a higher tax bracket, increasing their tax liability.
The amount of Social Security benefits exempted from tax hasn’t changed since 1984, the Washington Times reported. Under the current structure, retirees owe tax on benefits if their income and payments total more than $25,000 for a single person or $32,000 for a married couple. Once again please keep in mind the structure has not changed. Calculations from the Congressional Budget Office show that the percentage of Social Security benefits that must be taxed will increase by 10% this year and another 10% in 2023
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