Personal finance

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Starting this month, more than 65 million Social Security beneficiaries will receive benefit checks that include a record-breaking 8.7% cost-of-living adjustment.

Social Security benefits are slated to increase by more than $140 per month on average, according to the Social Security Administration.

The average retiree benefit will increase to $1,827, up from $1,681 in 2022.

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Exactly when you receive your first check — and see this year’s raise — depends on date of birth for most beneficiaries.

On Jan. 11, benefits are scheduled to be paid to those whose birthdates fall on the 1st through 10th of their birth month. Throughout the year, beneficiaries in that group can expect their payments on the second Wednesday of the month.

On Jan. 18, the first benefit checks of 2023 will go out to beneficiaries whose birthdates fall on the 11th through 20th of their birth month. Those beneficiaries can expect their benefit checks on the third Wednesday of every month.

On Jan. 25, benefits will be paid to beneficiaries who were born on the 21st to 31st of their birth month. Those beneficiaries can expect their benefit checks on the fourth Wednesday of every month.

Other beneficiaries are scheduled to receive their Social Security benefits on the third of every month if they also receive Supplemental Security Income (SSI) benefits or if they received Social Security before 1997. (The payment date will be earlier in June, September and December since the third falls on a weekend in those months.)

As the 8.7% increase sets in, there are a few things beneficiaries should keep in mind.

1. Prices are still high

An 8.7% COLA is hard to beat. Even amid record high inflation, most workers are not seeing raises that high. Moreover, both stocks and bonds suffered poor performance in 2022.

Yet there’s one thing the record high Social Security COLA still can’t beat: persistently high consumer prices prompted by inflation.

Because of that, your purchases will probably consume any increase you see in Social Security benefits, noted Joe Elsasser, founder and president of Covisum, a Social Security claiming software company.

“Although it might seem like a raise, it’s probably not a real raise,” Elsasser said.

2. Medicare premium costs are down

The good news for Social Security beneficiaries is that Medicare Part B premiums are down this year.

Monthly standard Part B premiums have fallen 3%, to $164.90, this year. In contrast, those standard Part B premiums rose by 14.5% in 2022, to $170.10.

As those monthly premium payments are typically deducted directly from Social Security checks, beneficiaries stand to 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 in 2023 for premium surcharges known as income-related adjustment amounts.

3. Your taxes may go up

As Social Security benefits increase, beneficiaries may be susceptible to more taxes on that income.

Up to 85% of Social Security benefits may be taxed based on a formula known as “provisional” or “combined” income. Those taxes start to kick in for individuals with more than $25,000 in combined income and couples with over $32,000.

Combined income is the sum of a portion of Social Security benefits plus adjusted gross income and non-taxable interest.

Because the brackets for combined income remain fixed, and are not adjusted for inflation, more retirees may be subject to taxes each year.

As a result, beneficiaries may want to carefully plan their retirement withdrawals to minimize an increase in taxes. That may include having more taxes withheld from your Social Security benefits.

Careful planning now can also help reduce the chances of increases in income-related Medicare premium surcharges in future years.

Experts say it’s best to enlist the help of a tax professional as soon as possible, especially as tax-filing season approaches.

“Don’t wait to see your CPA by April 15; it’s too late,” Brian Vosberg, a certified financial planner and enrolled agent who is president of Glendora, California-based Vosberg Wealth, previously told

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