7 Social Security changes for 2023
In 2023, the U.S. Social Security Administration (SSA) made several changes to the Social Security program. The key changes include an 8.7% cost-of-living adjustment (COLA) to the monthly benefit amount, an increase in the maximum earnings subject to the Social Security tax, an increase in how much income working Social Security recipients can earn before their benefits are reduced, a rise in disability benefits, and more.
- One of the significant changes for 2023 is the 8.7% increase in Social Security benefits, which is the largest cost-of-living adjustment in over 40 years. This adjustment helps benefits keep pace with inflation and is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The average monthly benefit for all retired workers is now $1,827, up from $1,681.
- The maximum payout for a worker retiring at full retirement age increased to $3,627, up $282 from 2022. Additionally, the earning limits for early claimants have increased. Individuals who work while collecting Social Security benefits can now earn up to $21,240 before any deductions occur, an increase of $1,680 from 2022.
- The maximum taxable earnings subject to the Social Security tax have risen to $160,200 in 2023, while the Social Security tax rates remain the same at 6.2% for employees and 12.4% for the self-employed.
- Social Security Disability Insurance (SSDI) benefits have also increased by 8.7% in 2023, with disabled workers expected to receive an average of $1,483 per month. The income thresholds for disabled workers to qualify for benefits have also increased.
- Furthermore, the amount it takes to earn a single credit for Social Security benefits has increased to $1,640 in 2023, up $130 from 2022.
- Retirees can also benefit from decreased healthcare costs, as Medicare Part B premiums and deductibles have declined for 2023.
- Despite these changes, the Social Security and Medicare Boards of Trustees’ annual report states that the trust funds could face depletion by 2034. Lawmakers are urged to address these financial shortfalls sooner rather than later.
You should consider your own financial situation and retirement goals when deciding the optimal time to claim Social Security benefits. Consulting a financial advisor can provide a better understanding of how these benefits fit into your overall retirement budget.