Social Security update: Three major money changes in 2023 that retirees should know
Asher Notheis
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The New Year is less than three weeks away, and with it comes several changes being made to Social Security benefits.
These changes come amid a changing landscape for the economy, which is being affected by several factors, including inflation. As such, changes to the benefits that retirees receive, like a boost in the monthly payment, are being enacted.
Due to inflation making everyday items more expensive, a major cost of living adjustment is being made by the Social Security Administration to the monthly payment retirees receive. This COLA will make the monthly benefit retirees receive 8.7% bigger than what they received in 2022, meaning the average recipient amount of $1,681 will increase by $146 to $1,827.
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The 8.7% COLA makes it the largest adjustment made since 1981, when the COLA for that year was 11.2%. The highest COLA made by the SSA was made a year earlier in 1980, increasing benefits by 14.3%.
Retirees can also expect an increase in limits on their annual earnings from benefits, impacting how much money they receive from said benefits. While a person can receive Social Security retirement benefits before retiring, the specific amount they receive depends on several factors, such as how much they make from their job and if they have reached the full retirement age of 70 years old, according to the Motley Fool.
A person receiving retirement benefits who is making over $21,240 and is not yet 70 will have $1 in benefits removed for every $2 they make over $21,240. As showcased by the Motley Fool, a worker under 70 who makes $26,240 will have their Social Security benefit reduced by $2,500, as they went $5,000 over the limit.
Conversely, a worker over 70 will have a limit of $56,520, and will have $1 in benefits for every $3 they make over the limit. For example, if a worker who turns 70 in 2023 and earns $62,520 annually, $6,000 over the limit, will have their Social Security reduced by only $2,000.
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Lastly, a bigger maximum benefit will be given to retired workers each month next year than what they received in 2022. This benefit will be increased to be $4,555 per month in 2023, up by almost $400 from the 2022 maximum of $4,194 retirees received this year.
To qualify for the maximum payment, workers must have an income exceeding the maximum taxable earnings limit, which is $147,000 for 2022, for at least 35 years. Additionally, they must also wait until they are 70, the full retirement age, to claim Social Security.