(DailyDig.com) – Every year, people relying on Social Security, or who know that they may need to rely on Social Security for their income at retirement, need to take note of any potential changes that could impact their incomes and their futures. 2023 has seen several changes that may have a significant impact on many retirees.
1. People May Need to Generate More Income to Get Social Security Credits
In 2023, workers will need to earn $1,640 in order to get each Social Security credit. A Social Security credit occurs when you have generated the required income. Since 1978, workers have been able to generate up to 4 credits per year. In order to take advantage of Social Security during your retirement years, you must have generated a minimum of 40 credits. That means the average worker will need to put in a minimum of 10 years of work to qualify for Social Security.
In order to earn the maximum 4 credits for 2023, workers will need to generate at least $6,560 in income.
2. Workers Can Generate More Income if They Work and Collect Social Security at the Same Time
Some workers choose to continue working on a part-time basis while drawing early Social Security payments. In 2020, workers will note a couple of changes. They will see benefits withheld at the rate of $1 for every $2 earned over $21,240 per year, or $1 for every $3 earned per year above $56,520 per year.
Disabled workers who collect disability and work part-time will also see an increase in their income limits for 2023.
3. Medicare Premiums are Decreasing
For many people relying on Social Security, the knowledge that Medicare premiums are decreasing comes as a welcome relief. This is the first drop in premiums in more than a decade. However, people relying on Medicare for their insurance needs may not want to celebrate yet. In some cases, this drop in Medicare costs may come with unexpected changes, including:
- Increases in copay or deductible amounts for many covered patients
- Changes in tiers for covered medications that could lead to increased costs for patients
- Increased limitations in coverage areas
Medicare patients may want to carefully review their policies to see how their coverage will change based on the new policy.
4. Social Security Taxes on Earnings Might Increase for Some High Wage Earners
In 2023, Social Security-taxable wages will increase from $147,000 to $160,200. Most workers, however, will not have to worry about seeing this change, since only around 6% of workers earn more than that amount each year.
5. Social Security Recipients Will See a Considerable Cost of Living Adjustment
This year, Social Security recipients will see the largest cost of living adjustment since the early 1980s: an 8.7% increase in their monthly take-home benefits. That will mean an average of $146 more for retired workers in 2023, and an average increase of $119 per month for disabled individuals on Social Security. This cost of living adjustment comes in response to the substantial inflation that has run rampant across the United States in the past year. It will begin in January 2023.
The changes to Social Security payments have the potential to have an immense impact on many retired and disabled individuals, who are reliant on those payments to supplement or provide their income during retirement. Careful attention to these changes, however, can make it easier for those individuals to make effective financial and budgeting decisions as they determine how to manage the financial issues they may face in the coming year.
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