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Could a Record 2023 COLA Increase Backfire on Seniors?
Dawn Allcot explains how cost of living adjustments (COLAs) are computed, and notes consensus forecasts of a 10.5% adjustment for 2023 would put an extra $175+ in the pockets of retirees, based on the average benefit of $1,668 per month. But higher nominal benefits would also push seniors into higher tax brackets. Income tax thresholds have never been adjusted for inflation since benefits became taxable in 1983 and further in 1993. Allcot also explains COLAs allow you to barely keep up with rising prices but not get ahead. She finishes the piece with a bill introduced in Congress to alter how COLAs are calculated. Full article here.