3 Social Security Changes That May Impact Millions Of Americans Who Aren’t Yet Retired In 2023

Social Security checks are currently sent to over 48 million seniors each month. But many more people will follow in their footsteps over the coming years.

Therefore, it is advisable for those who are still in the workforce to pay attention to significant changes to the federal program. The following three Social Security changes will affect millions of Americans who will retire in 2023.

1. A higher taxable income threshold

The Federal Insurance Contributions Act (FICA) limits payroll taxes to people who make up to $147,000 per year. In 2023, this maximum taxed income will rise to $160,200, which is the biggest annual increase in Social Security history.

How many Americans will be affected by this increase? 

According to the U.S. Census Bureau, 19.6% of American households made $150,000 or more in 2021. That represents more than 25.7 million homes.

This statistic includes an undetermined number of households with two incomes. However, according to the 2020 census, single heads of households made up about 35% of all households. The increased maximum taxable income would affect at least 9 million Americans the following year, according to this assessment.

2. Early claimants’ earnings test

Some people who receive Social Security benefits are still working. Benefits may be withheld from anyone who applies for benefits before reaching full retirement age.

Every $2 earned over $19,560 will result in a $1 benefit deduction from the federal government in 2022. Every $3 earned over $51,960 will result in a $1 benefit deduction from the government. These two ceilings will rise in 2023. The lower amount will be increased to $21,240, while the higher sum will now be $56,250.

The number of Americans this move will impact has yet to be discovered with certainty. However, a survey earlier this year by the Nationwide Retirement Institute revealed that 42% of respondents intended to apply for Social Security payments before reaching full retirement age while continuing to work.

But keep in mind that persons aged 26 and over were included in this study. It might not entirely reflect the number of people who filed for Social Security early and kept working in 2023.

3. Increased advantages

The 8.7% cost-of-living adjustment (COLA) that retirees will benefit from next year won’t be given to Americans who still need to reach retirement age. However, this rise will still be beneficial to people who are a few years away from retirement.

The average Social Security retirement payment will rise in 2023 thanks to the historic COLA. The maximum advantage will follow. As a result, the base Social Security benefit that the millions of Americans who have not yet retired can expect will also be higher.

You can be in line for much higher benefit amounts depending on how soon your retirement occurs. All but three years had seen an increase in the monthly amount since 1975, when Social Security started instituting an automatic yearly COLA.

Of course, inflation is not the only reason for these rises. In reality, the purchasing power of Social Security retirement benefits is decreasing in real terms. The purchasing power could, in some ways, decline even with regular COLAs.

The largest adjustments are still to come

The biggest changes to Social Security are still to come, even though these three key changes will affect Americans who still need to retire. Social Security will run out of money by the year 2035. This will result in a roughly 24% loss in benefits if nothing is done.

It’s a safe bet that Washington officials will strengthen the program to maintain benefits. However, the modifications they make to do this will have an undetermined impact on millions of Americans.

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Bio:
For over 20 years, Jeff Boettcher has helped his clients grow and protect their retirement savings. “each time I work with my clients, I’m building their future, and there are few things that are more important to a family than a stable financial foundation.”

Jeff is known for his ability to make the complex simple while helping navigate his clients through the challenges of making the right investment decisions. When asked what he is most passionate about professionally, his answer was true to character, “Helping my clients – I love being able to solve their problems. People are rightfully concerned about their retirement income, when they can retire, how to maximize their financial safety and future income.” Jeff started Bedrock Investment Advisors for clients who value a close working relationship with their advisors.

A Michigan native, Jeff grew up playing sports throughout high school and into college. While Jeff is still an ‘aging’ athlete, Jeff will take more swings on the golf course than miles running these days. He creates family time, often with weekly excursions to play golf, a hobby he shares with his three young children.

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