Five Social Security Changes That Could Impact You
The new year marked new changes to Social Security. As The Motley Fool explains, Social Security is a dynamic program that undergoes changes from year to year. Here’s a look at a few revisions that could impact you this year, either positively or negatively:
Historically high COLA — This year’s 8.7 percent cost-of-living adjustment is the largest in more than four decades. The average retired worker received a $146 boost to their Social Security check each month.
Bigger FRA payments — If you waited until you hit full retirement age (FRA) before claiming Social Security benefits you will see an additional $282 in your pocket each month. This year’s maximum monthly benefit at full retirement age is $3,627.
Earlier Filer Withholding Increased — On the other hand, if you started collecting Social Security before you reached full retirement age, you could be impacted by this year’s increased early filer withholding thresholds. However, once you hit your full retirement age, regardless of when you began taking benefits, there is no longer a penalty. After FRA, the Social Security Administration won’t be able to withhold a penny of what you’re due, regardless of how much you earn.
Higher payroll taxes — For those people still working, high wage earners will pay more in taxes this year. The earnings cap for payroll taxes jumped to $160,200 for 2023. It was only $147,000 last year. You will pay taxes on that additional income.
Qualifying got tougher — To qualify for Social Security retirement benefits, workers must have earned 40 lifetime work credits. You can earn a maximum of four credits a year so it will take the average worker 10 years to bank their 40 credits. Every $1,640 in wages or salary equates to one credit.
The Seniors Trust is committed to improving the financial well-being of America’s retirees through passage of The Social Security Expansion Act. It will give retirees an immediate benefits increase of about $200 a month, a fair annual cost-of-living adjustment (COLA) and increased minimum benefits.