The 2023 Social Security cost-of-living adjustment (COLA) announcement was welcome news for clients and advisors in the midst of turbulent financial markets.
The 8.7% increase in Social Security benefits will bring much needed additional cash to retirees facing higher prices across the board.
But, as advisors know all too well, one year does not a trend make.
In fact, it's important to note that this change is an outlier. The COLA increase is the largest in 40 years, reflecting current four-decade high inflation.
The 3.1% decline in Medicare Part B physician and outpatient services plan premiums is only the third decrease in the history of the program.
Lower-than-expected costs to the Medicare program for the Alzheimer drug Aduhelm, when compared to projections for 2022, is the primary, and one-time, reason for this.
Long-term projection data from the Social Security Administration and Medicare underscore the trend advisors and clients need to keep focused on: Medicare premium increases are, over at least a 10-year time horizon, projected to rise by more than two times expected COLAs.
This means retirees' budgets will be squeezed by rising health care expenses progressively, through retirement.
Putting the annual Medicare Part B premium decline of $62.40 into context, it will amount to less than 1% of expected 2023 retirement health care costs for an average healthy 65-year-old retiring next year — as we detail in our most recent analysis of this topic.
Total costs include Medicare Part B premiums, Medicare Part D prescription drug coverage premiums, and supplemental insurance premiums, along with all other out-of-pocket health-related costs retirees can expect to incur.
Ron Mastrogiovanni is CEO of 
