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Possible Negative Impacts of the COLA Spike on Retirement – Don’t Overlook These – Darlinez News.

<p> &lbrack;ad&lowbar;1&rsqb;<br &sol;>&NewLine;<&sol;p>&NewLine;<div>&NewLine;<div class&equals;"entry-content column content primary is-two-thirds">&NewLine;<div class&equals;"" style&equals;"padding-bottom&colon; 10px&semi;">&NewLine;<div class&equals;"">&NewLine;<p>&NewLine;&Tab;&Tab;&Tab;&Tab;&Tab;&Tab;<span class&equals;"tag is-dark is-uppercase">Economy<&sol;span>&NewLine;&Tab;&Tab;&Tab;&Tab;<&sol;p>&NewLine;<div class&equals;"byline-container">&NewLine;<div class&equals;"post-date is-italic has-text-grey is-size-7 has-text-weight-medium ">&NewLine;<p>January 17&comma; 2023 10&colon;06 pm<&sol;p>&NewLine;<&sol;p><&sol;div>&NewLine;<&sol;p><&sol;div>&NewLine;<&sol;p><&sol;div>&NewLine;<&sol;p><&sol;div>&NewLine;<&sol;p><&sol;div>&NewLine;<p>In October&comma; the Social Security Administration &lpar;SSA&rpar; announced the biggest boost to next year’s cost-of-living adjustment &lpar;COLA&rpar; in four decades&period; The COLA increase of 8&period;7&percnt; has already started hitting the bank accounts of Social Security recipients&period;<&sol;p>&NewLine;<p>This big raise will certainly help retirees who struggled last year due to a record rise in price levels&period; Moreover&comma; it will also allow retirees to increase their emergency savings&period;<&sol;p>&NewLine;<p>Along with these positive impacts of the COLA spike&comma; this spike could potentially have several negative impacts on retirees as well&period; In this article&comma; we will take a look at the negative impacts of the COLA spike on beneficiaries&comma; as well as on the future of Social Security&colon;<&sol;p>&NewLine;<h2>Impact On Taxes<&sol;h2>&NewLine;<p>Experts say that the boost in COLA could raise the tax burden for some recipients&period; The income thresholds haven’t changed since they were established in 1984&period; Thus&comma; a growing number of recipients are paying taxes on their Social Security benefits each year&period; Recipients are taxed on up to 50&percnt; of their benefits if their income exceeds the threshold income&period;<&sol;p>&NewLine;<p>Single taxpayers&comma; for instance&comma; need to pay taxes if their retirement income is more than &dollar;25&comma;000&comma; while for married couples&comma; the threshold income is &dollar;32&comma;000&period;<&sol;p>&NewLine;<p>Despite the COLA increase&comma; the average Social Security benefit for recipients will be less than the threshold income&comma; reaching almost &dollar;22&comma;000 per single recipient next year&period; For some retirees&comma; however&comma; the annual income could exceed the threshold income because they have other sources of retirement income as well&period;<&sol;p>&NewLine;<p>Even for such retirees&comma; however&comma; there is no surety that their income could exceed the threshold income&period; This is because the taxes depend on several variables&comma; such as the standard deduction &lpar;increasing in 2023 to reflect inflation&rpar;&period; Moreover&comma; taxes vary based on each person’s tax situation as well&period;<&sol;p>&NewLine;<p>Thus&comma; it is important that you work with your tax professional and financial advisor to determine ways to manage your taxes on Social Security and other income sources&period;<&sol;p>&NewLine;<h2>Impacts Of The COLA Spike On Medicare Premiums<&sol;h2>&NewLine;<p>Higher Social Security benefits will also have an impact on Medicare premiums&comma; but it will mostly impact higher-income seniors&period; This is because Medicare premiums work on a sliding scale based on income&period; Thus&comma; some higher-income earners could end up paying more Medicare Part B and Part D benefits&period;<&sol;p>&NewLine;<p>Even though the income-related monthly adjustment amount that is used to determine the premium for Part B and Part D is adjusted for inflation&comma; seniors with income above Medicare’s income thresholds may face a noticeable increase in premium&period;<&sol;p>&NewLine;<p>For instance&comma; single seniors with annual income below &dollar;97&comma;000 &lpar;and married with income below &dollar;194&comma;000&rpar; will be paying the standard Medicare premium of &dollar;164&period;90&period; But seniors with income above this threshold will be paying a higher Medicare premium&comma; somewhere between &dollar;230 to &dollar;560 per month&period;<&sol;p>&NewLine;<p>There is&comma; however&comma; some good news&period; The standard monthly Medicare premiums will be falling this year&comma; resulting in a larger Social Security check&period; The Centers for Medicare &&num;038&semi; Medicaid Services &lpar;CMS&rpar; said that the standard monthly premiums for Medicare Part B will drop by about 3&percnt;&comma; while the annual Medicare Part B deductible will decline by &dollar;7 to &dollar;226 in 2023&period;<&sol;p>&NewLine;<p>This drop would be a big relief&comma; especially after Medicare Part B premiums increased by 14&period;5&percnt; in 2022&period; Also&comma; the typical Medicare Part D premium is estimated to drop marginally by 2&percnt; to &dollar;31&period;50 this year&period;<&sol;p>&NewLine;<h2>Impact On Low-Income Social Security Recipients<&sol;h2>&NewLine;<p>For low-income beneficiaries&comma; the COLA spike could mean some cuts in income-related benefits&comma; such as MSP &lpar;Medicare Savings Programs&rpar;&comma; SNAP &lpar;Supplemental Nutrition Assistance Program&rpar;&comma; and Medicaid&period;<&sol;p>&NewLine;<p>Eligibility for these programs depends on the federal poverty level&comma; and all these programs are indexed for inflation&period; But if both couples are getting Social Security&comma; a COLA increase could push their income above the threshold limit for SNAP or MSP&period;<&sol;p>&NewLine;<p>Other programs could also be affected by the COLA increase&comma; including payments to military retirees&comma; disabled veterans&comma; and federal and state retirees&period; Such impacts of the COLA spike on low-income Social Security Recipients have pushed many to call for a temporary suspension of the federal taxation of Social Security benefits&period;<&sol;p>&NewLine;<h2>Possible Impact On Social Security Fund<&sol;h2>&NewLine;<p>Many experts believe that a higher payout could accelerate the Social Security Old-Age and Survivors Insurance Trust Fund’s insolvency date&period; A trustees report estimates that the Social Security Old-Age and Survivors Insurance Trust Fund could run out by 2034&period; This fund is used to pay the retirement benefits&period;<&sol;p>&NewLine;<p>The Social Security Trust Fund was close to insolvency in 1981 as well&period; At the time&comma; Congress came up with a few measures to reduce the Social Security benefits and raised taxes&period;<&sol;p>&NewLine;<h2>Final Words<&sol;h2>&NewLine;<p>Despite the record COLA increase&comma; it is hard to plan a comfortable retirement owing to the above discussed impacts of the COLA spike&period; Moreover&comma; high inflation and a potential recession peeking around the corner makes the whole planning thing even more uncertain&period;<&sol;p>&NewLine;<p>One good way to face these challenges is to use the help of a financial adviser&period; Your adviser can assist you in managing your finances and ensuring that your assets are safe&period; The adviser will work with you to review your retirement portfolio and income strategy to make sure that you’re still on track toward meeting your financial goals&period;<&sol;p>&NewLine;<p><i>This article originally appeared on ValueWalk<&sol;i><&sol;p>&NewLine;<p>&Tab;&Tab;&Tab;&Tab;<&excl;-- &num;post-footer--><&sol;p><&sol;div>&NewLine;

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