5 Things Retirees Need to Know About Social Security and Taxes

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1. COLA Effects: Understanding the Impact of Cost-of-Living Adjustments

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The 8.7% Cost of Living Adjustment (COLA) last year gave a considerable bump to retirees’ social security beneficiaries. However, this COLA increased social security income for the average retiree by about $1,760 for the year. While this may have been good news for many, it pushed many others into a higher tax bracket.

“If inflation rises faster, Social Security benefits will be even higher in nominal dollars and more families will pay on more benefits — further reducing the net benefit,”

-Alicia Munnell, director of the Center for Retirement Research, and research associate Patrick Hubbard.

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