Tim Robberts | digital vision | Getty Images
On January 18, the first benefit checks of 2023 will be handed out to benefit recipients whose dates of birth fall on the 11th to 20th of their month of birth. These beneficiaries can expect their benefit checks on the third Wednesday of each month.
Benefits are paid on January 25 to beneficiaries born on the 21st through 31st of their month of birth. These beneficiaries can expect their benefit checks on the fourth Wednesday of each month.
Other beneficiaries are scheduled to receive their Social Security benefits on the 3rd of each month if they also receive Supplemental Security Income (SSI) benefits, or if they received Social Security benefits prior to 1997 (the third falls on a weekend during those months.)
1. Prices are still high
An 8.7% COLA is hard to beat. Even in the midst of record-high inflation, most workers don’t see pay increases that big. Additionally, both stocks and bonds suffered poor performance in 2022.
But one thing still can’t beat Social Security COLA’s record high: persistently high consumer prices, fueled by inflation.
Because of this, your purchases are likely to outweigh any increases in Social Security benefits, noted Joe Elsasser, founder and president of Covisum, a Social Security claims software company.
“Although it looks like a raise, it probably isn’t a real raise,” Elsasser said.
2. Medicare premium costs have gone down
The good news for Social Security recipients is that Medicare Part B premiums have fallen this year.
Standard monthly premiums for Part B are down 3% this year to $164.90. In contrast, these Standard Part B premiums increased by 14.5% in 2022 to $170.10.
Because these monthly premium payments are typically deducted directly from Social Security checks, beneficiaries will see more of the COLA. (This may vary depending on how much you have withheld from your benefit checks for taxes.)
Higher-income Medicare beneficiaries may pay less for premium surcharges, known as income-based adjustment amounts, in 2023.
3. Your taxes may increase
As Social Security benefits increase, beneficiaries may pay higher taxes on that income.
Up to 85% of Social Security benefits can be taxed based on a formula known as “provisional” or “combined” income. These taxes begin to kick in for individuals with combined incomes over $25,000 and for couples over $32,000.
Combined income is the sum of a portion of Social Security benefits plus adjusted gross income and tax-free interest.
Because combined income rates remain fixed and are not adjusted for inflation, more retirees may be subject to tax each year.
As a result, beneficiaries should plan their retirements carefully to minimize an increase in taxes. This may include more taxes being withheld from your Social Security benefits.
Careful planning now can also help reduce the likelihood of an increase in Medicare income-based premiums in the years to come.
Experts say it’s best to enlist the help of a tax expert as soon as possible, especially as tax filing season approaches.
“Don’t wait until April 15 to see your CPA, it’s too late,” Brian Vosberg, a certified financial planner and enrolled agent, the president of Vosberg Wealth, based in Glendora, Calif., previously told CNBC.com.