Retirees will get a rare (and much needed) treat in 2023 thanks to a combination that some experts say might never happen again: a historically high cost-of-living adjustment for Social Security benefits and a decline in the cost of Medicare Part B premiums.
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Last week, the Centers for Medicare & Medicaid Services announced that the standard monthly premium for Medicare Part B enrollees will be $164.90 in 2023, down from $170.10 in 2022 - the first decline in a decade. The annual deductible for all Medicare Part B beneficiaries will fall to $226 in 2023 from $233 in 2022.
Those cheaper premiums and deductibles will coincide with what will be the highest COLA in decades. As GOBankingRates previously reported, the adjustment should be 8.5% or higher in 2023, up from 5.9% in 2022 and the biggest hike since an 11.2% increase in 1981. The Social Security Administration is expected to announce the official 2023 COLA in mid-October, following the September 2022 inflation numbers.
Even if the 2023 COLA is on the low end of projections, at 8.5%, it would translate into an extra $130 or so a month for the typical Social Security beneficiary. That's based on the average monthly benefit for all recipients, which was $1,546.59 as of August 2022, according to the SSA.
Retirees who claim both Social Security and Medicare typically see their Part B premiums taken out of their Social Security checks, The Motley Fool reported, which will contribute to even higher Social Security benefits in 2023.
The one-two punch of a much higher COLA and lower Medicare Part B premiums is something "we may never see again in the rest of our lives," Mary Johnson, Social Security and Medicare policy analyst at the non-partisan Senior Citizens League, told The Motley Fool.
And it comes at a good time for retirees, many of whom have been hit hard by soaring inflation and rising health care costs.
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"[It] can really be used to pay off credit cards, to restock pantries that have gotten low because people can't afford to buy as much today as they did a year ago and do some long-postponed repairs to homes and cars," Johnson said.
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This article originally appeared on GOBankingRates.com: Retirees Claiming Social Security and Medicare Are In for Rare Savings Combination in 2023