Social Security benefits make up about 30% of a person's total income. Retirees need to stay informed. Changes to Social Security are on the way.
You should know what to look for.
Social Security benefits are supposed to keep pace with inflation. Retirees are on pace for a huge cost of living adjustment in 2023 because of the extraordinary levels of inflation. According to The Senior Citizens League, the adjustment could be between 9% and 10.1%. That would be the largest increase in 33 years.
The Social Security Administration uses the Consumer Price Index for Urban Wage Earners and Clerical Workers to calculate cost of living adjustments. The data from the third quarter of the current year is compared to the data from the third quarter of last year. For the following year, the increase becomes the cost of living allowance.
The official COLA can't be calculated until the third quarter of the year. The SSA is expected to make an announcement in the middle of October.
If you are under full retirement age, a portion of your payment will be taken away. If you're under the annual earnings limit, the reduction may be less.
The full year can be earned up to $19,560 without any reduction. Every $2 in income over the limit will result in $1 in benefits being taken away. An individual who makes $21,560 will see their benefit reduced by $1,000 if they make more than the limit.
For a portion of the year, individuals can earn up to $51,960. Every $3 in income above the limit will result in $1 in benefits being taken away. If an individual makes more than the limit in the first nine months of the year, their benefits will be reduced.
The earnings limits will not be published until October, but they have increased at an annual pace over the past 10 years. The low limit would go from $19,560 to $20,135 and the high limit would go from $51,960 to $53,485 if the next increase is in line with the average.
There are two things you need to get the maximum retirement benefit. The maximum taxable income for 35 years is $150,000. You have to delay benefits until you are 70 years old. $4,194 per month is paid to individuals who claim Social Security this year.
Over the past 10 years, the maximum benefit for new retirees has risen at an annual rate of 2.5%. Retirees who have 35 years of wages that meet or exceed the maximum taxable limit and delay their benefits until age 70 will see their maximum benefit increase to $4,300.
The maximum benefit could rise a lot more because of the hot inflation this year. Between the years of 2020 and 2022, it increased by 7.6%. There is a chance that the maximum benefit could go up to $4,500 in three years.
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