How To Get More Money From Social Security

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How To Get More Money From Social Security – A bigger Social Security check fueled by inflation, and yes, hopefully some relief from high prescription drug costs is on the way. For many retirees, relief can’t come fast enough.

Inflation is brutal for low-income consumers, including millions of retirees without much savings, as the cost of gas, groceries and taxes rise.

How To Get More Money From Social Security

How To Get More Money From Social Security

Still, recipients of Social Security benefits can expect about an 8% to 9% increase in spending in 2023, according to early estimates, due to rising inflation.

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On average, with a current monthly benefit of $1,656, retirees could get an extra $150 a month if Social Security’s cost-of-living adjustment is 9% next year. In this example, the lifetime adjustment cost would be an additional $1,800 per year.

“This will be one of the highest COLA payments in the program’s history,” predicted Mary Johnson, a social security policy analyst at the nonprofit Senior Citizens Alliance.

Based on CPI data for the full year through July, if inflation continues at the same pace, the COLA adjustment could be around 9.6%.

Social Security Benefits Could Give Retirees Extra $1,800 Next Year

If inflation picks up, the adjustment could jump to around 10.1%, according to estimates from the Senior Citizens Union.

Only two months of consumer price data remain – August and September – to account for the revisions. The Bureau of Labor Statistics will release data for September on October 13.

Inflation adjusted to 5.9% for Social Security benefits in 2022. Cost-of-living adjustments begin with benefit payments to more than 64 million Social Security beneficiaries in January.

How To Get More Money From Social Security

But you’d have to go back to 1979, 1980, and 1981 to find any inflation adjustments of 9% or more. In 1980, the maximum content of cola was 14.3%.

Will Social Security Cola Give You A 10% Rise In 2023?

Inflation hits seniors who don’t take home much, even a small amount, Johnson said. and elderly without pension or savings.

“Every COLA matters,” Johnson told the Free Press, “because Social Security is the only inflation-adjusted source of retirement income.”

For example, if you need about 10% of the money now to buy groceries and other goods that you bought a year ago, you will quickly deplete your entire savings.

Although you can cut costs by using regular products, eating less meat or going out for less lunch, not everything we buy is random or crossed off our shopping list.

Social Security Payments For November: When Is Your Money Coming?

Inflation was high last year and will rise further in 2022. July strengthened, with month-on-month changes reversing, partly reflecting a 7.7% drop in petrol prices.

Retirees are not keeping pace with inflation this year, though, because most pensions are not adjusted for inflation — and many retirees have no pension at all.

For example, while the inflation adjustment for Social Security benefits based on 2021 data helps this year, it does not reflect ongoing inflationary pressures in 2022.

How To Get More Money From Social Security

Inflation is higher than the 5.9% adjustment in 2022 for retirees and people receiving Supplemental Security Income, which is for the disabled or blind whose income and resources fall below certain levels.

Social Security Benefits: How Will The Ssea Affect Your Cola Payments?

The consumer price index rose by 8.5% in the 12 months to July. Inflation rose 9.1 percent year-on-year in June.

“The actual Coke we received was below the actual rate of inflation,” Johnson said. His team estimates that the shortfall in Social Security benefits of $1,656 a month is about $58 a month.

“For the next Coke, we might be in a better position,” Johnson said. “I don’t know how long inflation will continue at the current rate.”

Richard Johnson, director of the Urban Institute’s retirement policy program, said no one is quite sure how much Social Security benefits will increase in 2023.

How To Retire At Age 62 And Collect Your Social Security Benefit

Assuming that energy prices continue to fall in August and September, which Johnson thinks will likely happen, and that other prices continue to rise at recent levels, Johnson estimates that Social Security’s COLA will be 8.7% next year.

The COLA could rise to 9.3% if energy prices hold steady for the next two months, he said.

“But that adjustment will only put them back where they were at the beginning of the year before the price went up. Every time the price goes up in 2023, they will continue to be behind.”

How To Get More Money From Social Security

Richard Johnson points out that Social Security’s cost-of-living adjustment doesn’t fully reflect how Social Security beneficiaries spend to pay their bills because the index is tied to the spending of urban wage earners and clerks, many of whom are too young to receive it. social security.

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He noted that the Bureau of Labor Statistics calculates an alternative index to reflect the spending of people age 62 and older, called the Seniors CPI, which puts less weight on transportation and more on health care and housing than standard measures of inflation. .

The CPI for seniors has risen slightly more than the general CPI over the past 10 months because it puts less emphasis on transportation and energy, Johnson said. Of course, the price of energy has increased significantly in the past year.

Some seniors benefited as drug prices rose 2.8 percent over the past 12 months, Richard Johnson said, below the general rate of inflation.

Many households, including those headed by retirees, face limited personal savings and prices are likely to fall even if inflation slows.

Social Security Trust Fund Is Running Out

About 48 percent of households headed by someone age 55 and older had no retirement savings in 2016, according to a study published in 2019 by the U.S. Government Accountability Office.

Some of those households get a pension that can help provide monthly income, but the study shows that 29% of those households have no pension and no retirement savings.

Not surprisingly, half of retirees who lack confidence in their ability to live comfortably in retirement blame inflation for causing more anxiety, according to the 2022 Retirement Confidence Survey by the Employee Benefits Institute and Greenwald Research.

How To Get More Money From Social Security

Inflation has not been a concern for decades, but now those who are retiring or planning to retire need to consider what higher prices will mean for their 401(k) plans or savings.

Social Security Money: Know This Before You Retire

One important takeaway: If you’re at least 62 in 2023, you’ll automatically benefit from next year’s COLA increase—even if you haven’t yet filed for Social Security benefits.

As long as you are age 62 or older in 2023, inflation adjustments are included in future payments each year until you apply for benefits.

The Social Security Administration says: “Starting the year you turn 62, you are eligible for increased cost-of-living benefits. This is true even if you don’t receive benefits until full retirement age or even 70.”

For retirees, the Low Inflation Act of 2022 offers hope that they will soon see lower drug costs, but most changes don’t happen overnight.

Social Security Cost Of Living Adjustment In 2023 May Be A Record High

Starting in 2025, a new federal law limits Medicare out-of-pocket costs for Part D prescription drugs to $2,000.

One 2023 change: Starting next year, the law limits copays for insulin products covered by Medicare Part D plans and insulin delivered through external insulin pumps under Medicare Part B to $35 per prescription per month. and there is no discount.

Many people on Medicare are concerned about higher premium costs in 2023. Typically, retirees are disappointed by the large increase in their Medicare Part B premiums and the reduction in inflation adjustments for Social Security benefits.

How To Get More Money From Social Security

Medicare Part B covers doctor visits and outpatient services, as well as some drugs. Any changes to Part B premiums may be announced in mid-November.

Cola: Social Security Recipients Need More Money

In November, the Centers for Medicare and Medicaid Services announced that the monthly Medicare Part B premium will be $170.10 by 2022, a 14.5% increase over the 2021 premium.

In May, HHS Secretary Xavier Becerra announced that the 2022 Medicare Part B premiums paid by Medicare beneficiaries should be reduced to account for overestimates caused by the inclusion of the new Alzheimer’s drug, Aduhelm, in the cost of the Medicare reimbursement program.

No such adjustment has been made this year, but many expect that to reduce the likelihood of a rate hike in 2023.

No, the pain of inflation will not end. But a few things may soon work in favor of retirees.

You Can Make More Money By Claiming Social Security Benefits At 62. Here’s How

Contact Susan Tompor via stompor@freepress.com. Follow him on Twitter @tompor. To register, visit freep.com/specialoffer. Read more about business and subscribe to our business newsletter. You are reading a free article whose views may differ from The Motley Fool’s Advanced Investment Services. Become a Motley Fool member today and get instant access to our top analyst advice, in-depth research, investment resources and more. Learn more

When it comes to Social Security, the more you know, the more money you can receive. See how many of these ways to get more benefits work for you.

If you want to improve your retirement, research how to get the most out of Social Security — because it’s an important source of retirement income for many people.

How To Get More Money From Social Security

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