Big changes are coming to Social Security in 2023, starting with a historic cost-of-living adjustment (COLA).
Beginning in January, Social Security recipients will collect an extra 8.7% per month in benefits. That will amount to an extra $146 per month for the average retiree.
There’s another perk, however, for those who are continuing to work after filing for Social Security benefits. Here’s what to expect in 2023.
Higher earnings limits
If you’re receiving Social Security while earning income from your job, your benefits could be reduced depending on your age and wages.
Each year, the Social Security Administration (SSA) sets limits for how much you can earn before your benefits are reduced. In 2022, those limits are $19,560 per year and $51,960 per year.
If you haven’t yet reached your full retirement age (FRA), your benefits will be reduced by $1 for every $2 you earn over the $19,560 per year limit. If you will reach your FRA this year, your benefits will be reduced by $1 for every $3 you earn over $51,960 per year.
As a result of the higher COLA for 2023, though, these limits will be increasing to $21,240 per year and $56,520 per year, respectively.
Earnings Limit for Those Under FRA
Earnings Limit for Those Reaching FRA This Year
In other words, starting in 2023, you’ll be able to earn more before your benefits are reduced.
Also, keep in mind that in both 2022 and 2023, these benefit reductions are temporary. Once you reach your FRA, you’ll receive adjusted payments to make up for the amounts that were withheld. After your FRA, your earnings will no longer be affected by these limits regardless of your income.
Other changes to expect in 2023
Aside from larger monthly payments and higher earnings limits, there are a few other Social Security changes to expect next year, including:
Higher maximum benefit amount: In 2022, the maximum you can receive from Social Security is $4,194 per month. Next year, due to the COLA, that number will increase to a whopping $4,555 per month — a boost of $361 per month.
Higher maximum taxable earnings limit: This limit is the highest income subject to Social Security taxes, and in 2022, it’s $147,000 per year. In 2023, that limit will increase to $160,200 per year. That means high earners will pay Social Security taxes on more of their income starting in January.
Increases in other benefits: The annual COLA doesn’t just affect retirement benefits. If you’re receiving other types of Social Security — such as spousal or divorce benefits, disability benefits, or survivors benefits — you’ll also collect higher payments in 2023.
Next year’s COLA will be the largest in more than four decades, and beneficiaries will receive some much-needed relief with higher payments in 2023. When you know exactly what to expect, it will be easier to prepare for these big changes.
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