Social Security update: Here are seven changes to benefits that were made for 2023
Misty Severi
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The Social Security Administration makes changes to benefits for retirees every October, which go into effect the following year.
The changes often include a cost-of-living adjustment (COLA) to their checks, a rise in the maximum earnings subject to the Social Security tax, and an increase in disability benefits, among other things. Here are seven changes that Social Security recipients received in 2023.
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An increase in the cost of living adjustment
The annual COLA rose to 8.7% for 2023, giving recipients a $140 boost in their paychecks. It marked the biggest increase in Social Security in approximately four decades. Experts predict the COLA for 2024 will be significantly lower at 3.1%, according to the Senior Citizens League.
Earnings limits increased for those who retire early
The administration increased the amount of money that a recipient could make through employment and still receive their maximum retirement payment. For 2023, the amount recipients who are under the full retirement age can make is $21,240, an increase of $1,680 from 2022. If a recipient makes more than $21,240 then they would dock $1 for every $2 that they are over the limit.
If a retiree reaches 67 in 2023, they can still make up to $56,520, compared to $51,960 in 2022. For every $3 recipients earn past the limit, the Social Security benefits will be reduced by $1, according to Investopedia.
Increased maximum monthly payout at full retirement age
Recipients reach their full retirement age at 67 if they were born after 1960. If they wait until their full retirement age, they will receive $3,627 each month, a $282 increase from 2022. But if they attempt to retire early, beneficiaries could see permanently reduced funds of $2,572 each month. Those who decide to retire later, at age 70, could see a higher payout of $4,555.
Taxable income rises to a maximum of $160,000
Employees are required to pay a Social Security tax of 6.2% on any income up to $160,200 in 2023, which employers have to meet. The taxable income this year is an increase of $12,800 compared to 2022, which saw taxes on income up to $147,000.
Social Security benefits for disabled workers increase
Recipients on disability can now see an increase in their monthly paychecks of 8.7%, the same increase as COLA. This makes their monthly checks $1,483 on average in 2023, up from $1,364 in 2022. Those who are married and have at least one child can see payments of $2,616 on average, an increase of $209 from 2022.
The money disabled recipients receive is supposed to help replace some of their lost wages.
Experts warn Social Security trust funds could be depleted by 2034
Experts warned that both the Social Security and Medicare trust funds could face depletion in the 2030s if nothing is done to rectify the problems, according to the most recent Social Security and Medicare Boards of Trustees annual report. But discussions on the future of Social Security have been going on in Congress for years.
If the projections hold, retirees who receive money from the Old Age and Survivors Insurance (OASI) Trust Fund will receive only 77% of their scheduled benefits, starting in 2033.
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Credit earning threshold goes up
For people born after 1929, the amount of money it takes to earn one of the 40 credits needed for retirement has gone up. Employees can only earn up to four credits toward retirement each year, with each credit awarded for every $1,640 the employee makes, which is an increase of $130 from 2022, according to the Social Security Administration.