An 8.7% Social Security cost-of-living adjustment for 2023 could have significant tax implications for beneficiaries. This recent CNBC article examines how an 8.7% increase will impact taxes on Social Security benefits, and how retirees can minimize the tax impact.
"Increases in Social Security income next year may not give beneficiaries the ability to ramp up their retirement withdrawals without facing tax consequences. For example, with a roughly 7% increase in tax brackets, beneficiaries may think they can take 7% more from their individual retirement account next year and have the same tax results. That’s not the case, because of a larger amount of Social Security becoming taxable. However, there may be room for some beneficiaries to increase their retirement withdrawals while still not incurring a tax liability on their benefits...Beneficiaries who have the choice of where to withdraw their supplemental income should reevaluate that choice every year to get the best tax results."
Read the CNBC article in its entirety.