Retirees are about to get the largest increase to their Social Security benefits in about four decades. Social Security calculates a cost-of-living-adjustment every year, and this year it has been sky high.
Many retirees who claim Social Security are also covered by Medicare, the federal health insurance program for those that are 65 and older. Some nice adjustments will be made for next year.
Retirees are about to experience a once-in-a-lifetime event. Let me tell you what's going on.
The COLA is expected to come in around 8.7%, even though we are still waiting on September inflation data. Expect it to be over 8%, even though it might bounce around a bit. This year has seen a 5.9% increase in the cost of living. In the last two years, the cost of living has gone up.
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Next year, Medicare Part B premiums are expected to decrease. There are many parts of Medicare. Some senior care is covered by Part A. Medicare Part B covers a lot of services from doctors and healthcare providers such as home healthcare, outpatient care, medical equipment, and preventative services.
The first drop in Medicare Part B premiums in a decade was announced by the Centers for Medicare and Medicaid Services recently. It's rare to see premiums decline after Medicare Part B premiums rose close to 15%.
Standard monthly Part B premiums will go down from $170.10 to $164.90 in the years to come, according to a statement from the Centers for Medicare and Medicaid Services. The deductible for Medicare Part B will go from $233 to $226
Retirees who claim both Social Security and Medicare will usually see their Part B premiums taken out of their Social Security checks so this will contribute to higher Social Security benefits next year.
Mary Johnson, a policy analyst for The Senior Citizens League, said that the higher COLA combined with the lower Medicare Part B premiums may never be seen again.
"That can be used to pay off credit cards, to replenish pantry that have gotten low because people can't afford to buy as much, and to do some long-postponed repairs to homes and cars."
If inflation eventually comes down and new changes to Medicare can make further progress in controlling costs, then these changes could make a difference in seniors' lives for a long time.
Social Security benefits have lost a lot of their purchasing power in recent decades, but these latest changes are a step in the right direction
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