Social Security in 2023: What changes will there be in payments and benefits?
Even after 87 years the Social Security Administration continues to tweak elements of the program and imposes an annual COLA increase.
Social Security was first introduced in 1935 by President Roosevelt and it has become a key source of income for tens of millions of households every month.
The program is nearly 90 years old but is constantly evolving and there are a number of key changes coming in 2023. All recipients will enjoy an increase on their monthly payments in the New Year, but the work credit requirement has been upped so it will be slightly harder to qualify in the future.
Here’s three key changes to Social Security in 2023…
COLA increase will boost payments
The most publicised of the changes coming in January is the cost-of-living adjustment (COLA) increase. Every year the Social Security Administration (SSA) enacts a percentage increase on all monthly payments to ensure that they keep up with inflation.
After inflation soared in 2022, Social Security recipients will receive an 8.7% COLA raise next year. This is the sharpest rise in nearly 40 years and will be music to the ears of claimants.
Work credit requirements will be increased
Recipients of Social Security payments must have earned at least 40 work credits to be eligible, assuming they are not claiming on the work history of their spouse.
The maximum amount you can earn in a year is four credits, but you have to have made a certain amount of money to do so. In 2022 that figure was $1,510, but in 2023 that is upped to $1,640. For low earners or part-time workers, that could mean that you won’t receive the full four credits next year.
Hefty tax bills for high earners
Social Security programs are largely paid for in the payslip taxes that almost all workers pay throughout their working life. However the tax is only applied on a certain amount of income and that amount is going to change in 2023.
The threshold, also known as the wage base limit, was $147,000 in 2022 but that limit is going to increase to $160,200 next year. This means that high earners will see an extra $13,200 of their 2023 income subjected to Social Security taxes.