The Impact of Inflation on Social Security Benefits

The brief’s key findings are:

• The recent spurt in inflation is an important reminder that keeping pace with the cost of living is one very valuable feature of Social Security.
• However, some of the inflation protection offered by Social Security’s COLA is undermined by two factors:
  • • Medicare Part B premiums – deducted from Social Security benefits up front – tend to grow faster than the COLA; and
    • a growing portion of benefits are subject to income tax.

• These factors reduce the net benefit that retirees get to cover shelter, food, and clothing.