This year will bring important changes to Social Security, many of which are related to the largest cost-of-living adjustment (COLA) in more than 40 years. The new COLA will affect Social Security payouts, but it is not the only change that will occur in 2023.
According to a newly issued information sheet from the Social Security Administration, the following are six changes to the program that will take effect this year.
New COLA Takes Effect
The major news for 2023 is a Social Security COLA hike of 8.7%, the greatest since an 11.2% increase in 1981. The heavy increase in the COLA this year is owing to the high inflation rate, which is also the highest in 41 years.
The average monthly Social Security payment for all retired workers has risen to an estimated $1,827 from $1,681, the SSA said a gain of $146 a month.
The new payment amount began in January 2023 for anybody receiving Social Security payments. The revised payment levels for persons receiving Supplemental Security Income (SSI) began on December 30, 2022.
Keep in mind that the 8.7% COLA in 2023 will not apply to all Social Security claimants. Some payment increases will be greater than 8.7%, while others may be less owing to a number of situations such as your primary insurance amount (PIA) and when you enroll in Medicare. The SSA should have issued recipients COLA notices with details on revised payment amounts.
Increase in Social Security Disability Thresholds
The SSA offers monthly payments to those who have been unable to work for a year or longer due to a disability, and the benefits normally continue until the recipients are able to work regularly again.
However, you may have a qualifying impairment even if you are still working, such as if you are unable to undertake employment that you previously did due to a medical condition.
In this instance, you are only qualified up to a specified salary level. When you cross that line, you are no longer considered to have a qualifying disability.
Following are the threshold changes for 2023, based on average monthly earnings:
|Trial Work Period (TWP)||$970/month||$1,050/month|
SSI Federal Payment Standard Rises
The maximum Federal SSI payment levels for Social Security claimants who also qualify for Supplemental Security Income (SSI) payments have increased in 2023, based on the 8.7% COLA. Individuals will have to pay $914 per month, up from $841 in 2022. Couples will pay $1,371 per month in 2023, up from $1,261 in 2022.
Rise in Max Benefits for Workers Retiring at Full Retirement Age
Americans who retire at full retirement age, which is either 66 or 67 depending on when they were born, saw their maximum benefits increase this year. The monthly maximum increased from $3,345 in 2022 to $3,627 in 2023.
Maximum Taxable Earnings Will Increase for Those Still Working
Anyone who has ever gotten a paycheck is aware that a portion of it is withheld to cover Social Security taxes. The maximum taxable earnings is a restriction on the amount of your yearly earnings that can be taxed by Social Security. This maximum increased from $147,000 in 2022 to $160,200 in 2023.
Change to Earnings Test Exempt Amounts
If your wages surpass a specific threshold and you are under the full retirement age (FRA), Social Security withholds payments. This is known as the exempt amount from the retirement earnings test. According to the SSA, one of two separate exempt amounts apply, with a lesser amount applied in years before the year you achieve FRA and a greater amount applied in the year you reach FRA.
If you are under full retirement age, the earnings test exempt level increased to $1,770 per month in 2023 from $1,630 in 2022. If you have attained FRA, your monthly salary will increase to $4,710 in 2023 from $4,330 in 2022.