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2023 Social Security increase means less money for many seniors, here’s why

Ken Fishman, Esther Wallach
FILE – In this Jan. 12, 2021, file photo residents Ken Fishman, 81, left, and Esther Wallach, 82, right, hold hands as they wait in line for the Pfizer-BioNTech COVID-19 vaccine at the The Palace assisted living facility in Coral Gables, Fla. (AP Photo/Lynne Sladky, File)

In order to keep up with rising inflation, which could surpass 11% in 2023, the federal government is increasing the social security benefits of seniors.

Social Security recipients receive a cost-of-living adjustment, or COLA, which is indexed to inflation, according to Fox Business.

Unfortunately, recipients are taxed on their benefits, and the increase in monthly payments will likely mean a higher tax bracket for seniors, ultimately leaving them with a negative net gain.

Social Security recipients could see a 10.5% increase in payments next year, raising the monthly fixed income from Social Security of $1,668 by about $175.10.

This increase could put many senior citizens above a $25,000 yearly income for individuals and $32,000 for couples, the threshold at which point benefits are taxed.

In addition, the Congressional Budget Office estimates that taxes on benefits will grow by 10% this year and another 10% next year.

Despite the increase in taxes, it is estimated that the federal government will no longer be able to pay Social Security benefits in full by the year 2035 and if payment increases to recipients continue to grow, it could be even sooner.