The first checks at the 8.7% COLA arrive in January

On January 18, 2023, the first benefit checks will be issued to beneficiaries whose date of birth falls on the 11th.^th until 8 p.m^th in their birth month. Those beneficiaries can expect their benefit checks on the third Wednesday of each month.

On January 25, a benefit will be paid to beneficiaries born on the 21st^St until 31:00^St in their birth month. Those beneficiaries can expect their benefit checks on the fourth Wednesday of each month.

Other beneficiaries are scheduled to receive their Social Security benefits on the third day of each month if they are also receiving Supplemental Security Income (SSI) benefits or if they received Social Security before 1997. (The payment date will be earlier in June, September and December, as the third falls on a weekend in those months.)

An 8.7% COLA is hard to beat. Even with record high inflation, most workers aren’t seeing such high increases. Moreover, both stocks and bonds have performed poorly in 2022.

However, there is one thing that the record high Social Security COLA has yet to overcome.

Because of this, your purchases will likely eat up any increase in Social Security benefits, said Joe Elsasser, founder and president of Covisum, a Social Security claims software company.

“While it may seem like a pay raise, it’s probably not a real pay raise,” Elsasser said.

The good news for Social Security beneficiaries is that Medicare Part B premiums are down this year.

Standard monthly Part B premiums fell 3% this year to $164.90. By contrast, those standard Part B premiums rose 14.5% to $170.10 in 2022.

Because those monthly premium payments are usually deducted directly from Social Security checks, beneficiaries expect more of a COLA. (This may vary depending on how much you have withheld from your benefit checks for taxes.)

Medicare beneficiaries with higher incomes may pay less in 2023 in premiums known as income-related adjustment amounts.

As Social Security benefits increase, beneficiaries may face more taxes on that income.

Up to 85% of Social Security benefits can be taxed based on a formula known as “provisional” or “composite” income. Those taxes kick in for individuals with combined income over $25,000 and couples over $32,000.

Combined income is the sum of a portion of Social Security benefits plus adjusted gross income and tax-free interest.

Because the brackets for combined income remain fixed and are not adjusted for inflation, more retirees may be taxed each year.

As a result, beneficiaries may want to plan their retirement withdrawals carefully to minimize tax increases. This may include having more taxes withheld from your Social Security benefits.

Careful planning now can also help reduce the chances of income-related Medicare premium increases in future years.

Experts say it’s best to seek the help of a tax professional as early as possible, especially as tax filing season approaches.

“Don’t wait to see your CPA until April 15th, it’s too late,” Brian Vosberg, a certified financial planner and enrolled agent at Vosberg Wealth in Glendora, Calif., previously told CNBC.com. is the president.