Key Social Security Changes for New Year
According to the Social Security Administration, approximately 70 million Americans will see an 8.7 percent increase in their Social Security benefits and Supplemental Security Income (SSI) payments in 2023. On average, according to the SSA, Social Security benefits will increase by more than $140 per month starting in January.
Why the big bump? As the SSA explains, federal benefit rates increase when the cost-of-living rises, as measured by the Consumer Price Index (CPI-W). The SSA will send notices throughout the month of December to retirement, survivors, and disability beneficiaries, SSI recipients, and representative payees.
Those who want to know their new benefit sooner can do so through their personal SSA account. If you don’t have one already, you can sign up online. You can access this information in early December, prior to receiving the mailed notice.
On the other hand…
It is possible to reach a maximum income, beyond which there are no more Social Security taxes. As the SSA explains, Social Security's Old-Age, Survivors, and Disability Insurance (OASDI) program limits the amount of earnings subject to taxation for a given year. The same annual limit also applies when those earnings are used in a benefit computation. This limit changes each year with changes in the national average wage index.
The SSA calls this annual limit the contribution and benefit base, and it’s also known as the taxable maximum. For earnings in 2023, this base is $160,200. Employers need to take note of this when calculating deductions
No matter your situation, these are changes that may lead to questions. Consult your R&A advisor regarding your particular situation.