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How Social Security is Changing in 2023

How Social Security is Changing in 2023

June 21, 2023

This January, Social Security beneficiaries received the largest cost of living adjustment (COLA) in more than 40 years. The new, larger monthly checks were no doubt a welcome change for those struggling with the impact of inflation. But that’s not all of the changes Social Security has seen in 2023.

Beneficiaries can earn a bit more. For those who have claimed their Social Security benefits early (before “full retirement age), an earnings limit impacts the size of their monthly checks. When you earn above a certain limit, part of your benefits can be withheld. This year, those who claimed “early” benefits can earn $1,770 per month, up from $1,630 per month in 2022, before their checks are reduced.

The taxable earnings limit rose. Social Security benefits paid to beneficiaries today are provided by taxes on earnings from current workers. As we all know, taxes are deducted from our paychecks to fund the program, up to a certain limit. Once you earn over that limit, that part of your paycheck is not taxed by Social Security.

For 2023, the taxable earnings limit rose from $147,000 to $160,200.

The maximum benefit grew. Due to this year’s COLA, the maximum possible benefit became larger. Those who retire at full retirement age this year can draw as much as $3,627 per month, up from $3,345 last year. Of course, because benefits are based upon prior earnings during working years, not everyone will qualify for the maximum benefit.

SSI payments were also raised. That historic 8.7 percent COLA also applied to Supplemental Security Income, which provides benefits to lower-income retirees and some disabled people. The maximum monthly SSI benefit is now $914 per month for individuals and $1,371 per month for couples.

As we always remind our clients, no one should rely upon Social Security to entirely fund their retirement. It is designed to provide supplementary income only. But you should definitely stay on top of changes and understand your current and/or future benefits. We can discuss Social Security at our next retirement planning appointment, so that you understand what you can and cannot expect from the program.