Social Security has been in existence for so long that it is easy to become comfortable with and believes that monitoring it is unnecessary.
The majority of Social Security’s essential principles remain unchanged in 2023. For example, if you begin collecting your benefits prior to the full retirement age, you will continue to be penalized with a lesser payout. And you will continue to get a larger monthly payment if you file for retirement after reaching full retirement age.
In 2023, however, Social Security has changed dramatically in certain ways. Here are numerous noteworthy alterations you should be aware of.
1. Benefits Got An 8.7% Rise
Retirees have complained for years that their cost-of-living raises don’t keep up with inflation. This year, benefits were raised enough to potentially increase or sustain recipients’ buying power.
This year’s 8.7% cost-of-living adjustment was due to 2022’s high inflation. Living expenditures are still high this year, but inflation has slowed. So, some recipients should be able to improve their finances.
2. Benefits May Take More Of Your Earnings
You may believe you do not need to be concerned with Social Security until you begin receiving payments. Keep in mind that you pay taxes while working. This year, those with higher incomes will pay more in taxes.
An annual pay cap is established. Last year, wages over $147,000 were tax-free. This year, the salary cap has been increased to $160,200, so increasing the tax burden on high-income employees.
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3. Social Security Eligibility Gets Harder
Social Security isn’t guaranteed later in life. Work credits are earned by paying into the program and working a specified number of years.
Social Security eligibility requires 40 lifetime labor credits, four of which can be earned per year. A credit now requires more revenue. Last year, $1,510 of income qualified for Social Security. It costs $1,640.
If you’re earning enough to get your four credits for 2023, you don’t need to worry about these numbers. But, part-timers should be aware of this change.
It’s easy to assume Social Security won’t change. Nonetheless, it undergoes various changes annually. Even if you’re not eligible for benefits, it’s important to stay informed.
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