Adjustments will be made to Social Security in 2023.
Income is fairly straightforward prior to retirement.
People are either self-employed or work for someone else.
They get paid for goods or services provided.
According to a recent Money Talks News article titled “5 Ways the Social Security System Will Change in 2023,” income in retirement involves a combination of retirement savings and Social Security.
For those who have plans to retire in 2023 or who are already retired, understanding updates and changes to Social Security is essential.
What changes have been made to Social Security for 2023?
The benefit will be increased.
The monthly amount has been increased by 8.7 percent.
The monthly payment for the average American retiree will increase by about $146 per month for the cost-of-living adjustment.
Does this mean everyone will see this specific benefit increase?
First, $146 is an average.
Some people will have more and others less when adjusted by 8.7 percent.
Second, those with Medicare Part B premiums will have the premium amount withheld from Social Security checks.
Third, additional benefits may move individuals into a higher tax bracket.
As a result, they will be able to keep less of their Social Security income.
Are we having fun with inflation yet?
Working retirees will have an increased earning limit.
Some people claim Social Security prior to reaching full retirement age.
Claiming Social Security does not mean you may no longer work a job.
Rather, Social Security will withhold part of the benefit only if the income from your employment exceeds the allowed limit.
These limits will also increase in 2023.
Those who reach full retirement age after 2023 will be limited to making $21,240 from their jobs in 2023.
Individuals who reach full retirement age in 2023 will be limited to $56,520.
The withheld benefits are not lost.
After you stop working, monthly benefits are increased to account for the months where Social Security was withheld.
The tax cap on worker income will increase.
Those who make more than $160,200 in 2023 from worker income will not owe Social Security payroll taxes on each earned dollar.
The rate of the tax will not change.
It is set to remain the same in 2023 at 6.2 percent for employees and 12.4 percent for the self-employed.
To receive Social Security benefits, most individuals must have at least 40 credits.
Up to four credits can be earned each year by those who work and pay Social Security.
The earning requirement for a Social Security credit will be increased to $1,640 next year.
The maximum benefit will be raised.
There is a cap on the amount Americans can receive in their monthly benefits.
This number is based on how old a person is when they retire.
The maximum benefit available to those who retire at full retirement age will increase from $3,345 per month to $3,627 per month.
Although each year can bring either financial success or challenges, retirees can make better decisions with their Social Security benefits when equipped with current information.
When in doubt, consult with your financial and tax advisors.
Reference: Money Talks News (Oct. 13, 2022) “5 Ways the Social Security System Will Change in 2023”