Social Security has provided financial security for our nation's retirees for more than 80 years. According to the Center on Budget and Policy Priorities, the program pulled more than 20 million people out of poverty in the year 2020.
Social Security can be changed. Over time, the parts are designed to change. The Social Security changes that take effect today are listed here.
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The largest change is the cost-of-living adjustment being recognized in the January payouts.
Social Security's cost of living adjustment is used to account for inflation that the program's beneficiaries have had to contend with. Benefits should increase in line with inflation so recipients don't lose purchasing power. Beneficiaries will see an increase in their Social Security check in the years to come.
An 8.7% cost-of-living adjustment is the highest in a long time. It will be the largest nominal dollar increase in the program's history. This month, the average retired worker will get a boost to their Social Security check.
The second time this century that Medicare Part B premiums will decline from the previous year is important for retirees. It will result in a real-money boost to their pocketbook since most Medicare enrollees have their Part B premium deducted from their Social Security check. The 8.7% COLA for 2023 could lead to a real money improvement for many retirees.
If you're a lifetime high-earning retiree, the new year gives you the chance to get a bigger monthly benefit check.
The maximum monthly payment a retired worker could receive was $3,345 last year. Thanks to a rapidly rising inflation rate, the maximum monthly benefit at full retirement age will increase by almost $300 per month in the years to come. The top-tier benefit check is brought home by 2% of retired workers.
Three criteria are needed to reach the maximum monthly benefit.
It isn't all peaches and cream for the well-to-do in the years to come. If you're a high-earning worker, you may have to pay more in taxes this year.
The 12.4% payroll tax on earned income is one of the main sources of revenue for Social Security. You and your employer split the tax liability if you work for another company. If you're self-employed, the onus is on you.
Wages and salaries were subject to the payroll tax. The maximum taxable earnings cap has gone up due to the increase in the National Average Wage Index. This $13,200 year-over-year increase in the maximum taxable earnings cap could result in an extra $1,636.80 in payroll tax for the self-employed.
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Social Security isn't an entitlement you get for being a U.S. citizen. Working earns you your benefit. You need at least 40 lifetime work credits to be eligible for a retirement benefit.
It is easier than you might think. The threshold to quality for retirement benefits can be reached in as little as 10 years with a maximum of four credits earned each year.
The earned income threshold is low. A work credit was given for over a thousand dollars last year. $6,040 in earned income would have given a worker their full credit for the year.
You will have to work harder to get Social Security coverage. You'll need $1,640 in wages or salary to get a lifetime work credit. You need to make $6,560 to get the maximum of four work credits.
Today is the day that Social Security's disability income thresholds take hold.
Most people think of the more than 48 million retired workers and their families when they think of Social Security. The long-term disabled are supported by social security. More than 8 million disabled workers received a monthly Social Security check in November.
Workers can only bring home so much in earned income if they receive a Social Security disability benefit. The benefits for non-blind disabled workers would stop in 2022. The threshold for blind disabled workers was set last year.
Without having their benefits stopped, non-blind disabled workers will be able to make $1,470 a month. The earnings thresholds for blind disabled workers will be increased by $200 per month.
The sixth and final Social Security change that takes effect today can affect retired workers who began receiving a Social Security check before they reached their full retirement age.
Social Security punishes early filers in a number of ways. The retirement earnings test is one of them. If they generate too much earned income, the SSA can take some or all of the Social Security benefit away.
There are two different levels to the test. There are people who won't reach full retirement age in 2023. For every $2 in income over $19,560, the SSA could deduct $1 from benefits. The threshold will increase to $21,240 per month.
There are two categories for early filers who will reach full retirement age this year. The SSA would take $1 in benefits for every $3 in earned income above $51,960 in the months prior to reaching full retirement age. The income threshold will go up to $56,520 per month.
The retirement earnings test is no longer applicable once you reach your full retirement age, regardless of when you started taking benefits. Depending on your full retirement age, the SSA will not be able to take a penny of what you're due, regardless of how much you make.
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