The federal government’s primary social welfare safety net will be undergoing adjustments on January 1, 2023, affecting Social Security benefits, as millions of Americans celebrate the new year by committing to personal betterment for the coming year.
Those who are already receiving benefits from the program can rejoice. The additional increases will help recipients keep up with the rising prices of food, gas, and other necessities brought on by inflation.
But for those who have yet to settle their debts? Some people might not be as thrilled about the shifts. What they’ll mean for you, whether you’re already retired or still have decades to go.
COLA Adjustment in 2023
The most significant shift in 2023 will be the COLA increase of 8.7 percent. If your current Social Security payment is $2,000 per month, your new payment will be $2,174.
The 2023 cost-of-living adjustment (COLA) is directly related to the high inflationary pressures that have increased the prices of nearly everything Americans buy regularly.
The next piece of information is a little more complicated, depending on your income bracket. Since payroll taxes provide the bulk of Social Security’s funding, higher wages will be subject to a greater percentage of the program’s overall take. There was a cap on taxable income of $147,000 for Social Security purposes before the year 2023.
Employees making more than $160,200 per year will have an additional $13,200 of their salary subject to taxation beginning in 2019.
Social Security continues to reward patience in its policies. The 67-year-old full retirement age will not change in 2019.
Furthermore, the modifications to the maximum amount occurring for beneficiaries who are older only serve to emphasize how wise it is to put off applying for Social Security until you are absolutely necessary. While seniors can begin receiving payments at age 62, waiting will increase their monthly income.
You can receive a delayed retirement credit of up to 8% of your annual benefits simply by delaying your claim until age 67, on top of the maximum benefit amount.
Remember that it also pays to look into spousal and survivor possibilities, such as present married couples deferring the benefits of the top earner and accepting the lesser earner’s benefits first. For more information about timetables, consult the AARP Resource Center.
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Social Security Struggle
Republican House and Senate leaders as well as significant senators have proposed putting funding up for a vote each year or reducing it together in order to balance the budget. This seems to be political suicide.
Voters place a considerably higher value on benefit preservation than on the finer points of the budget. Democrats would be foolish to ignore the anticipated trust fund deficits, which damage the program’s reputation.
The growing income disparity and the low pay for so many workers are two variables that have gotten little attention in the financial crisis that Social Security is currently facing.
Payroll taxes on income are where the money for Social Security comes from. Through revisions in 1977 and 1983, it was hoped to stabilize Social Security’s financial situation.
The reformers aimed to tax about 90% of wage and salary income, which about matched the amount levied when the program first began in 1937.
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