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With the arrival of 2023, some important changes will come into force, especially in terms of retirement benefits. How will they impact your pocket? In Takecareofmoney.com we are going to explain it to you in a little more detail.
Whether you’re currently collecting benefits or working and contributing directly to the Social Security Administration (SSA), it’s important to know what the rules are changing.
What will be the main changes?
Increased maximum taxable income
During 2022, employees who are paying taxes on Social Security benefits are on earnings up to $147,000. The thing is, if you earn more than this amount, the rest of your income won’t be taxable for Social Security purposes. This is called the salary base limit and is the equivalent of a percentage of the average salary. That is, every amount paid in taxes has a ceiling.
By 2023, this cap will be $160,200.
By 2023, the benefits that retirees will receive will be higher, which implies a higher 8.7% for this year. This means that they will see these increases in their monthly checks starting in January 2023. These are due to the fact that the Social Security Administration annually makes a Cost of Living Adjustment, with which it intends to balance the income of the elderly at the same time than inflation rises.
This year’s COLA is historic, since such a large increase had not been seen before. This is because consumer price indices have been high throughout 2022, indeed, they have been since the end of 2021.
Earnings test for early claimants
Those who have not reached their full retirement age, known as FRA, temporarily lose $1 in benefits for every $2 earned over $19,560 earned in 2022. They also lose $1 in benefits for every $3 earned over $19,560. $51,960 if you reach your full retirement age sometime during the year.
These income limits will increase to $21,240 and $56,520, respectively, in 2023.