Money Talks News’ recent article entitled “5 Ways the Social Security System Will Change in 2023” looks at several ways in which Social Security will change for 2023.
- The benefit increase. Social Security recipients will see their monthly payments go up by 8.7% in 2023. That cost-of-living adjustment (COLA) means an extra $146 a month. Not all retirees will see much extra Social Security income in 2023 because the Medicare Part B premium is withheld from some retirees’ Social Security payments.
- The earnings limit for working retirees. If you claim Social Security retirement benefits before reaching your full retirement age (FRA) and also continue working, the SSA will withhold some of your benefits, if your income exceeds the earnings limit. This limit generally increases annually as the national average wage index increases. For 2023, it will rise from $19,560 to $21,240 if you reach full retirement age after 2023, and from $51,960 to $56,520 if you reach full retirement age in 2023. However, you don’t lose any benefits withheld due to your income exceeding the applicable earnings limit.
- The tax cap on workers’ income. The maximum amount of a worker’s income subject to Social Security payroll taxes will increase from $147,000 in 2022 to $160,200 in 2023. As a result, if you’re lucky enough to earn more than $160,200 in 2023, you won’t owe Social Security payroll taxes on every dollar you earn. The Social Security payroll tax rate itself will remain the same in 2024: 6.2% for employees (employers pay another 6.2% on their employees’ behalf) and 12.4% for the self-employed.
“To receive Social Security retirement benefits, most people need to accumulate at least 40 ‘credits’ during their working lifetime, according to the U.S. Social Security Administration (SSA). Currently, you can earn up to four credits per year, if you work and pay Social Security taxes.”
The earnings required for you to get a Social Security credit, also known as one-quarter of coverage, will go up from $1,510 in 2022 to $1,640 in 2023.
- The maximum benefit. There’s a limit to how much money a retiree can get in monthly benefits—the maximum Social Security benefit. Your maximum Social Security benefit is based upon the age at which you retire. The maximum benefit for a person who retires at their full retirement age will go up from $3,345 per month in 2022 to $3,627 per month in 2023.
Reference: Money Talks News (Oct. 13, 2022) “5 Ways the Social Security System Will Change in 2023”
Suggested Key Terms: Social Security