2 Important Changes to Social Security and How to Manage Them
The future of Social Security is an unknowable thing, and that makes many American seniors nervous. The important thing is to stay caught up on all the changes to Social Security so you can manage your retirement savings appropriately.
Click here to learn about the 3 Common Fears in Retirement and How to Manage Them.
Changes to Social Security
An Increase in Maximum Monthly Payout at Full Retirement Age
While the earliest age you can start claiming Social Security retirement benefits is 62, claiming before leads to a permanently reduced payout. Since 2022, the maximum payout of a worker retiring at full retirement age went up by $282 and is now at $3,627.
An Increase in Credit Earning Threshold and Maximum Taxable Earnings
In order to qualify for Social Security benefits, you have to earn at least 40 credits over your working life. You can only receive a maximum of four credits per year, which you earn by working and paying Social Security taxes, and the amount it takes to earn a single credit has gone up $130 in 2023, now costing $1,640 per credit.
And while the Social Security tax rate is still at 6.2% for workers and 12.4% for the self-employed, the maximum taxable earnings have jumped from $147,000 to $160,200.
An Increase in Early Claimant’s Earnings Limits
Part of your Social Security benefits may be temporarily withheld when you work. Since 2022, the income limits have increased by $1,680. Now you can earn up to $21,240 in exempt earnings per year in 2023 before reaching full retirement age and the Social Security Association starts withholding benefits. If you reach full retirement age in 2023, the income limits have increased by $4,560, meaning you can earn up to $56,520 per year.
An Increase in Social Security Disability Benefits and Income Thresholds
Workers can earn coverage for disability benefits by paying Social Security taxes through their paychecks with Social Security Disability Insurance (SSDI). This insurance program supplements lost wages for those who no longer work due to a disability. In 2023, those who receive Social Security disability benefits will receive an 8.7% increase, as well as the amount they can earn without losing access to SSDI.
An Increase in COLA for Beneficiaries
Roughly 70 million Social Security recipients received an 8.7% cost-of-living adjustment (COLA) increase to their monthly benefits, the highest increase in decades. This COLA change began at the start of 2023 and helps benefits keep pace with inflation.
A Decrease in Medicare Part B Premiums
The Social Security Act determines premiums for Medicare Part B, which have declined in 2023. The standard monthly premium for Medicare Part B has gone down by $5.20 and is now $164.90, and the annual deductible for Medicare Part B has dropped by $7 and is now $226. What a way to enjoy wins for both Social Security and healthcare!
How to Manage Changes to Social Security
These potential changes to Social Security mean that future retirees may need to save more money for retirement. Investing your money could be one way to mitigate the difference, but the real benefit is having time on your side to plan and prepare for potential changes. As always, consult your financial advisor before making any financial decisions.
Medical expenses might also come out of nowhere, and retirement planning can make the difference between outliving your finances and aging well. With this FREE eBook, you can learn the 6 Money Planning Tips for Your Senior Living.
At Life Enriching Communities (LEC), we’re committed to ensuring seniors feel well-equipped to plan for their future and age how they wish. Contact us today to learn more about LEC and the programs we offer, and feel free to learn on your own with resources we’ve created for those interested in our services.