Social security changes are always a topic of interest for people approaching retirement age or who have already reached partial or full retirement. There have been few changes in recent years, but this year marks several new increases and some other changes that even those still planning for retirement need to be aware of.
2023 introduced significant changes to social security payments, maximum taxable income, and maximum payout amounts. Most of these changes are welcome, especially the adjustment of the cost of living. With current inflation rates hurting workers and retirees alike, a sizable bump in social security payments is helpful.
Cost of Living Adjustment (COLA)
The cost of living increase is particularly noteworthy and the largest increase since the 11.2 percent increase of 1981. While this year’s increase wasn’t quite that high, 8.7 percent is a nice boost. Some might argue that a higher percentage would have been appropriate given the higher costs of goods, services, and housing in 2023, especially with the increasing talk of a major recession. The pandemic also impacted the costs of products in many sectors, and consumers are still feeling the pinch.
Increase in Taxable Income
While the cost of living adjustment is welcome, the increased taxes will impact higher-earning workers. In 2022, the maximum taxable income was $147,000. This amount was taxed at the 6.2 percent rate in most cases. You were not taxed for what you earned above the $147,000 threshold if you earned beyond that base amount.
That amount has increased this year to $160,200, increasing the income taxed. The justification for this increase is that workers are earning higher wages. This will result in significantly higher taxes paid by workers who make a higher wage. However, this does not consider things like location. In cities such as San Francisco, for example, this is not considered a high wage, and with inflation and skyrocketing rent prices, is barely considered lower middle class.
Increase In Maximum Benefits
Benefit Increases for Spouses and Disabled Workers
There are increases for widowed spouses and disabled workers, as well. Included are widows and widowers with dependent children, widowers, and disabled workers. This is an across-the-board increase.
Other Adjustments for Social Security Recipients
Another change affects those who are still working while collecting social security. For those who take their social security benefits early and still work, you can earn up to $1770 per month before your benefits are withheld. This is an increase over the 2022 rate of $1630. For recipients who reach full retirement before collecting social security, the amount you can earn before benefits are withheld is far greater, at $4710 per month.
The full retirement age has not changed and will remain at age 67 for 2023. You can continue to take your benefits at 62 if you wish but at a reduced rate, and those who wait until age 70 will get an increased amount.
If you are curious about how social security changes for 2023 will affect your retirement benefits, you can always visit the website of the Social Security Administration. You’ll find more detailed information about the new changes, as well as general information about social security benefits for retired persons, disabled workers, and survivor benefits.
2023 introduced significant changes to social security payments, maximum taxable income, and maximum payout amounts. Most of these changes are welcome, especially the adjustment of the cost of living. With current inflation rates hurting workers and retirees alike, a sizable bump in social security payments is helpful.
Cost of Living Adjustment (COLA)
The cost of living increase is particularly noteworthy and the largest increase since the 11.2 percent increase of 1981. While this year’s increase wasn’t quite that high, 8.7 percent is a nice boost. Some might argue that a higher percentage would have been appropriate given the higher costs of goods, services, and housing in 2023, especially with the increasing talk of a major recession. The pandemic also impacted the costs of products in many sectors, and consumers are still feeling the pinch.
Increase in Taxable Income
While the cost of living adjustment is welcome, the increased taxes will impact higher-earning workers. In 2022, the maximum taxable income was $147,000. This amount was taxed at the 6.2 percent rate in most cases. You were not taxed for what you earned above the $147,000 threshold if you earned beyond that base amount.
That amount has increased this year to $160,200, increasing the income taxed. The justification for this increase is that workers are earning higher wages. This will result in significantly higher taxes paid by workers who make a higher wage. However, this does not consider things like location. In cities such as San Francisco, for example, this is not considered a high wage, and with inflation and skyrocketing rent prices, is barely considered lower middle class.
Increase In Maximum Benefits
In other positive news, the maximum benefits rate for single and married recipients has increased. Workers who retire at the full retirement age will experience an increase in the maximum payment from $3345 to $3627. The maximum amount is reduced for those who choose to take the earlier retirement.
Benefit Increases for Spouses and Disabled Workers
There are increases for widowed spouses and disabled workers, as well. Included are widows and widowers with dependent children, widowers, and disabled workers. This is an across-the-board increase.
Other Adjustments for Social Security Recipients
Another change affects those who are still working while collecting social security. For those who take their social security benefits early and still work, you can earn up to $1770 per month before your benefits are withheld. This is an increase over the 2022 rate of $1630. For recipients who reach full retirement before collecting social security, the amount you can earn before benefits are withheld is far greater, at $4710 per month.
The full retirement age has not changed and will remain at age 67 for 2023. You can continue to take your benefits at 62 if you wish but at a reduced rate, and those who wait until age 70 will get an increased amount.
If you are curious about how social security changes for 2023 will affect your retirement benefits, you can always visit the website of the Social Security Administration. You’ll find more detailed information about the new changes, as well as general information about social security benefits for retired persons, disabled workers, and survivor benefits.
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