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7 Ways Social Security Is Changing in 2023

By Maurie Backman - Oct 23, 2022 at 8:00AM
A pile of Social Security cards.

7 Ways Social Security Is Changing in 2023

A new set of rules

Social Security serves as an important income source for millions of seniors and retirees. And although the program has been around for a very long time, it still tends to undergo changes from year to year. Here are some big changes to expect in 2023.

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1. Benefits are getting an 8.7% raise

Social Security benefits are eligible for annual cost-of-living adjustments, or COLAs. The purpose of COLAs is to help seniors maintain their buying power as inflation drives living costs upward. Because inflation has been so rampant this year, seniors in 2023 will get their largest Social Security COLA in decades.

ALSO READ: It's Official: Here's Your Social Security Raise for 2023

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2. The average monthly benefit is rising to $1,827

The current average monthly Social Security benefit is $1,681. Once next year's 8.7% raise takes effect, it should bring the average monthly benefit up to $1,827. The hope is that an increase like that will make it possible for recipients to better manage their expenses.

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3. A Medicare premium hike won't eat into 2023's COLA

People who are enrolled in Social Security and Medicare at the same time have the cost of Medicare Part B premiums deducted from their benefits. Most years, Medicare Part B costs increase, thereby taking away from recipients' COLAs. In 2023, the cost of Part B is dropping, so seniors on Medicare should get to keep their COLA in full.

ALSO READ: This Medicare Change Will Help Social Security Recipients Get More Out of Their 2023 Raise

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4. The wage cap is rising

Social Security's main revenue source is the payroll taxes it collects from workers. But workers don't pay those taxes on all of their earnings necessarily. Each year, a wage cap is set that limits that amount of income that gets taxed for Social Security. This year's wage cap is $147,000. Next year, that limit will jump up to $160,200, so higher earners will lose a lot more of their income to Social Security taxes.

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5. The value of a work credit is increasing

To qualify for Social Security benefits in retirement, you need to accrue 40 work credits in your lifetime, and you can collect up to four per year. Right now, a single work credit is worth $1,510 of earnings. Next year, the value of a work credit will increase to $1,640.

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6. The earnings-test limit is rising

Seniors can work and collect benefits from Social Security at the same time. But those who do so before reaching full retirement age risk having some benefits withheld if their incomes exceeds what's called the earnings-test limit. This year that limit is $19,560, and next year it's rising to $21,240. Meanwhile, the earnings-test limit for workers reaching full retirement age this year is $51,960. The limit for those reaching full retirement age next year is going up to $56,520.

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7. The maximum monthly benefit is going up

To qualify for a higher monthly Social Security benefit, you need to be a higher earner during your career. Right now, the maximum monthly Social Security benefit is $3,345. Come next year, it will be $3,627.

ALSO READ: Why the Maximum Monthly Social Security Benefit Could Become Even Harder to Get

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Keep tabs on Social Security

Whether you're currently collecting benefits from Social Security or expect to do so in the future, it's important to stay abreast of changes to the program. These changes could impact your senior income, as well as your income during your working years. And the more you stay in tune to Social Security, the better equipped you'll be to roll with updates to the program's rules.

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