Social Security 2022
Despite the most significant cost-of-living adjustment in decades, 2022’s Social Security cost-of-living adjustment may not go as far due to inflation and Medicare costs.
That’s because the Consumer Price Index — a government measure for the change in prices over time — climbed 6.2 percent year-over-year in October, marking the biggest inflation increase in 30 years.
Also, standard Medicare Part B premiums will be higher next year, due in part to a new, expensive Alzheimer’s drug.
The Senior Citizens League calculates that those with the lowest monthly Social Security benefits — around $366 per month — will see no increase next year. However, those with higher benefits — approximately $2,870 per month — will see roughly a 5 percent increase.
Here are things you can do to plan for this change.
Reduce Your Tax Bill
A 5.9 percent cost-of-living adjustment (COLA) in 2022 will increase the gross amount of your benefits and income. As a result, more of your Social Security benefits could be subject to taxes.
This takes effect in tax year 2022, so there’s time to plan.
Your Hilltop Wealth Advisor can work with you to identify the best strategy, including giving to your favorite charity to reduce your taxable income.
Also, watch your timing.
To pay the lowest tax bill, you’ll usually want to keep your income reasonably level. If your income is low one year but high the next, you are more likely to pay more tax overall.
It would help if you planned to sell assets and take retirement plan withdrawals, so your income remains somewhat steady from year to year.
For example, if you have more income from earnings, assets sales, or other taxable income in one year, consider waiting until after December 31 to withdraw money from your traditional retirement plans. Waiting a few weeks or so could give you considerable savings at tax time.
Explore Medicare Savings Programs
Even if you don’t qualify for Medicaid, one of these four Medicare Savings Programs may be able to help you pay your premiums and other costs:
- Qualified Medicare Beneficiary (QMB) Program
- Specified Low-Income Medicare Beneficiary (SLMB) Program
- Qualifying Individual (QI) Program
- Qualified Disabled and Working Individuals (QDWI) Program
To see if you’re eligible for savings, you may contact Medicare.gov.
The material shown is for informational purposes only and should not be construed as accounting, legal, or tax advice. Hilltop Wealth Solutions is a registered investment adviser with the Securities and Exchange Commission; registration does not imply a certain level of skill or training. While efforts are made to ensure information contained herein is accurate, Hilltop Wealth Solutions cannot guarantee the accuracy of all such information presented.