Social Security benefits will change in a few ways this coming year (2023).
Social Security recipients should see a significant increase in their checks next year, due to cost of living adjustments built into social security. The bump up could end up being over 10%, if current inflation rates continue. This means that a person getting an $1,800 social security check now would receive about $1,980 starting this January.
Another change is going to be an increase in the base wage limit. In 2022, the base wage limit is $147,000. This means that your income under 147,000 is subject to social security tax, while the amounts over $147,000 are not. It is unclear as to how much the base wave limit will increase. The number is linked to the National Average Wage Index, and since wages are increasing, we are likely to see an increase in the base wage limit also.
People turning 66 next year will have to wait 2 months longer than those born in years prior to obtain full Social Security retirement benefits. Full retirement age will continue to increase until it plateaus at 67 years. Anyone born in 1956 would be able to take full social security retirement at 66 and 4 months; 1957 66 and 6 months, 1958 66 and 8 months, 1959 will be 66 and 10 months. Anyone born after 1960 will have to wait until 67 to retire with full benefits.
Lastly, retirees who receive benefits before full retirement age will have to forgo some of their social security check if they have other income. The amount that Social Security benefits are reduced will likely go down, so seniors who aren't at full retirement age and decide to continue working will be able to keep more of their social security check next year.
As you plan for retirement, please keep these changes in mind. If you have any questions, please feel free to call us!