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Fallout from inflation could hit seniors ever harder

What to know about Social Security benefit increases
Social Security COLA
Posted at 8:14 PM, Aug 02, 2022
and last updated 2022-08-02 22:06:41-04

TAMPA, Fla. — According to The Senior Citizens League, seniors living on a fixed income could see an estimated 10.5% increase in social security benefits in 2023. But, for some, that boost could do more harm than good.

Experts told ABC Action News reporter Michael Paluska that the cost of living adjustment (COLA) could push people into a higher tax bracket, increase Medicare premiums, and impact other benefits.

"Higher incomes can lead to higher Part B premiums, and Part D premiums which are set up the same way," Mary Johnson, a social security and medicare policy analyst for The Senior Citizens League, told Paluska.

She continued, "And then, lower-income Social Security recipients also have a problem. And I spoke to people yesterday about this. The income is used to determine our assistance benefits like SNAP, rental assistance, Medicare expert help, and Medicare Savings Programs. So, when incomes increase, these programs will adjust their benefits accordingly to what's allowed under their state's income and savings rules."

Johnson said now is the time to meet with a financial advisor (if you have one) or make sure you check Social Security benefits to see if 2023 brings an increase.

Johnson said inflation is eroding savings for millions of Americans.

"We have about a survey out there that shows 50% have spent all their emergency savings; people are carrying more debt on their credit cards," Johnson said. "And over, say, a 22-year period, my research has found that people have lost 40% of their buying power during that length of time in retirement."

Local leaders in Tampa Bay told Paluska they, too, are seeing more and more seniors in dire need of help.

"I believe it's a state of emergency for our mature adults," Katrina Osborne, Director of Pearlenas and the Resource Empowerment Centre, said. "We're seeing HUD communities raising rent prices, and now they're unable to afford it."

Osborne works with city officials and other non-profits to get an advocate for seniors and make sure they are connected to programs to offset the price increases. Osborne said many seniors who can no longer afford rent are moving in with family members or finding roommates.

"I know the biggest thing that we've been doing is house sharing; there's a lot of communities that are doing the non-traditional or was at one time student housing is now becoming the norm for our seniors of partnering together and living with each other," Osborne said.

That has detrimental impacts on their health and well-being. Another concern for seniors on a fixed income is choosing between paying for food, rent, or prescription drugs.

Osborne believes everyone can come together to find a solution to help our seniors.

"And granted, it seems like a lot and very overwhelming," Osborne said. "But, if we can incrementally get together a project plan and knock out a little bit at a time. But not only that, we need to involve our mature adults; we need to ask them what they need, and we need them to be a part of it. Because many of them in our baby boomer age, they're living until 100 years old, and they certainly don't want to go from 70 to 100 with these circumstances."

Johnson said a bump in the COLA is better than no bump and that the average monthly increase is about $175. But, you need to know what that increase could mean for you.

"You can look up the information on the IRS website, the taxation of Social Security benefits, look that up. But, if your income is over $25,000 for an individual, or $32,000, for a married couple, your benefits could become taxable," Johnson said. "If you haven't paid that tax in the past, do some math now. Because it might affect your taxes in this coming tax season if you think your income will get to those levels, and if you do believe that, make sure you're having money withheld."

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