The Social Security Administration revealed the cost-of-living adjustment will increase by 5.9% in 2022. The greatest increase in over 40 years. However, be prepared for Medicare, taxes, and inflation to eat away at your adjustment.
The Social Security adjustment is not the only thing increasing in 2022. Medicare Part B, which covers doctors’ fees, and outpatient services, will also increase drastically. The trustees for the Centers for Medicare & Medicaid estimated this past summer that the premium would jump to $158.50. The government announced this week Medicare Part B standard premium will rise by 14.5%, making it $170.10 in the coming year, far above the estimate.
What does this mean for high-income retirees? The effect of rising Medicare premiums is even more consequential for those whose premiums tie to their income. These Social Security beneficiaries above the combined income thresholds will pay taxes on up to 85% of their benefits.
As inflation prompts higher annual benefit adjustment, more families will pay taxes on their benefits, resulting in an overall reduced net benefit.
These adjustments will continue to rise in the future. Consider consulting with our financial advisors to review how these changes may affect the course of your retirement. Schedule a consultation with one of our planning experts here.