Social Security payments are set to increase in 2023 due to skyrocketing inflation, according to analysts.
In order to maintain a reasonable standard of living, Social Security recipients receive a cost-of-living adjustment, or COLA, which is indexed to inflation, according to Fox Business. But this has a downside: Recipients are taxed on their benefits, so the increased payment could shoot them into a higher tax bracket, ultimately earning them less than before.
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Mary Johnson, a policy analyst at the Senior Citizens League, told the outlet recipients could see a 10.5% increase in payments next year, raising the monthly fixed income from Social Security of $1,668 by about $175.10. This increase could put many senior citizens above a $25,000 yearly income for individuals and $32,000 for couples, the threshold at which point benefits are taxed.
In addition, the Congressional Budget Office estimates that taxes on benefits will grow by 10% this year and another 10% next year.
Despite the increase in taxes, it is estimated that Social Security payments will no longer be able to be given out in full by the year 2035 at the current rate, according to WWLP. If payment increases to recipients continue to grow, it could be even sooner.
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The newest COLAs have not entirely kept up with inflation either. In order for retirees to obtain the same buying power they had in 2000, Social Security payments would have to increase by $539.80 per month on average.
