4 Social Security Changes in 2023

In 2023, the retirement benefits scheme will look a little different, and especially Social Security will look different. Changes will occur not as a result of significant legislative changes but because some changes are integrated directly into the software and occur automatically.

So, what can seniors expect from their retirement benefits in the next year? Here are four major developments to keep an eye on.

1. A generous  COLA

When on Social Security, retirees get periodic COLAs. COLA stands for Cost-of-Living Adjustment – a benefits boost designed to guarantee that seniors preserve their purchasing power even when expenses rise due to inflation.

Since inflation has been so high this year, retirees are certain to get a significant COLA. The benefits rise in 2023 might be roughly 10.8%, which means that a senior getting the average $1,661 benefit could receive nearly $180 more in monthly checks.

2. An increase in the wage base limit

Workers pay Social Security taxes on income up to a particular amount, known as the wage base limit, each year. The cap will be $147,000 in 2022. If you earn more than this, no further Social Security tax is due, and no income over this amount is included in calculating your retirement benefits.

The pay base limit is determined by the National Average Wage Index (NAWI), which is probably certain to rise. As a result, more income will likely be subject to Social Security taxation next year.

3. A later FRA

Retirees get a regular Social Security payout based on their average earnings. That basic payment is only provided to persons who get their first retirement benefit at the full retirement age (FRA).

FRA was age 65 when the Social Security payments program was established, but it’s not that young anymore. FRA has been steadily becoming older due to revisions introduced in 1983. And the same thing will happen again next year.

FRA used to be age 66 and four months for everyone born in 1956. However, for everyone born in 1957 or after, the age is 66 and six months. It is 66 and eight months for those born in 1958, while retirees born in 1959 must wait until they are 66 and ten months to be eligible for their standard benefit. Finally, anyone born in 1960 or after will have to wait until they’re 67 years of age to avoid having their benefits decreased owing to the early filing.

That implies that people turning 66 next year will have to wait two months longer than their contemporaries did this year to receive their standard benefit.

4. Increased criteria for working while receiving benefits

Finally, retirees’ Social Security payments are now susceptible to temporary forfeiture if they earn too much money while claiming benefits. This regulation only applies to those individuals who work before reaching the full retirement age.

The criteria at which retirees’ benefits begin to be withheld are modified regularly, and rising inflation and reasonable wage growth mean seniors will be able to earn more next year before being affected by this law.

Current and prospective retirees should be informed of these impending changes so that they can be prepared when making retirement plans for 2023.

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Bio:
After entering the financial services industry in 1994, it was a desire to guide people towards their financial independence that drove Aaron to start Steele Capital Management in 2013. Armed with an extensive background in financial planning and commercial banking coupled with a sincere passion for helping people, Aaron has the expertise and affinity for serving the unique needs of those in transition. Clients benefit from his objective financial solutions and education aligned solely with
helping them pursue the most comfortable financial life possible.

Born in Olympia, Washington, Aaron spent much of his childhood in Denver, Colorado. An area outside of Phoenix, Arizona, known as the East Valley, occupies a special place in Aaron’s heart. It is where he graduated from Arizona State University with a Bachelor of Science degree in Business Administration, started a family, and advanced his professional career.

Having now returned to his hometown of Olympia, and with the days of coaching his sons football and baseball teams behind him, he now has time to pursue his civic passions. Aaron is proud to serve on the Board of Regents Leadership for Thurston County as the Secretary and Treasurer for the Morningside area. His past affiliations include the West Olympia Rotary and has served on various committees for organizations throughout his community.

Aaron and his beautiful wife, Holly, a Registered Nurse, consider their greatest accomplishment having raised Thomas and Tate, their two intelligent and motivated sons. Their oldest son Tate is following in his father’s entrepreneurial footsteps and currently attends the Carson College of Business at Washington State University. Their beloved youngest son, Thomas, is a student at Olympia High School.

Focused on helping veterans and their families navigate the maze of long-term care solutions, Aaron specializes in customized strategies to avoid the financial crisis that care related expenses can create. Experience has shown him that many seniors are not prepared for the economic transition that takes place as they reach an advanced age.

With support from the American Academy of Benefit Planners – an organization with expertise and resources on the intricacies of government benefits – he helps clients close the gap between the cost of care and their income while protecting their assets from depletion.

Aaron can help you and your family to create, preserve and protect your legacy.

That’s making a difference.

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