Six Social Security Trends to Lookout for in 2023
As inflation has hit all-time highs this year, we’ve all been anxiously awaiting the news of the Social Security Administration (SSA) and how extreme its Cost of Living Adjustment (COLA) will be defined. This substantial payout will be cherished for the more than 70 million Americans who depend on Social Security benefit programs.
Below we outline six Social Security developments as we enter 2023:
1. Cost its Cost of Living Adjustment Upswing
The Social Security Administration has announced the COLA of 8.7% for Social Security benefits and SSI payments. Payable beginning in January 2023, this is the greatest increase since 1981, when COLA was an 11.2% increase.
2. Taxable Earnings Rising
Due to the increase in the average wages in the U.S., this means a worker’s income will be subjected to Social Security taxation. Referred to as “the wage base,” in 2023, your income will be taxed at an OASDI rate of 6.2%.
3. Maximum Social Security Benefit Increase
Not surprisingly, the maximum Social Security benefits are rising because as the wage base rises, so do qualifying Social Security earnings. It’s important to mention that this determined rate applies to those retiring at the full retirement age (FRA) of 67 years old.
4. Spouse and Disabled Benefits Climb
Good news for those with disabilities, widows, and widowers. The SSA says the average benefit for this group will also increase.
5. Adjustments to Earnings Test Exempt Amounts
Before you hit the official retirement age of 67, if you choose to claim your retirement benefits Social Security withholds some benefits from your paycheck above certain levels of income. This program is called the retirement earnings test exempt amounts, and if you are still working, it can claim a large portion of your benefits.
6. Medicare Premiums May Be Lower
The Centers for Medicare and Medicaid Services (CMS) announced that monthly Medicare Part B premiums will decrease in 2023. Most retirees participate in both Social Security and Medicare programs, so this comes as good news.
Typically, you do not want to take Social Security benefits while you are still working because you receive less than you are eligible to get. You can officially begin collecting Social Security at age 62, but you will obtain reduced benefits, and you can wait until age 70 to begin taking benefits at the full rate. There are many factors to contemplate before taking your own Social Security, beyond your age and when you stop working. Your investments and at what rate they’ll be taxed, in addition to what other fixed incomes you may have during retirement should all be considered.
We are keeping our eyes open to the future, however. Come the mid 2030s, the SSA anticipates the Social Security Trust will be depleted. While Social Security will continue to pay benefits, thanks to payroll taxes on current workers, estimates see benefit levels dropping to 80% of current levels.
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