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.

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