2 Social Security Changes That Could Hurt You Financially in 2023

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While Social Security has been around for many decades, the program tends to undergo certain changes each year. And those changes can be a mixed bag.

Now let’s talk about good news first. In 2023, seniors with Social Security will enjoy their biggest increase in decades: an 8.7% cost-of-living adjustment (COLA). The hope is that such an increase will help seniors regain some purchasing power in the face of inflation and avoid some of the struggles they may have faced this year.

Another positive change in Social Security looming? The threshold of the income test is going up. This means that early Social Security claimants who choose to continue working will have the opportunity to earn more money without affecting their benefits.

Image source: Getty Images.

But while it’s easy to argue that Social Security will change for the better in 2023, there are some changes that may not fit so well. Here are a few that can negatively affect you.

1. A higher wage ceiling

Social security’s main source of income is payroll taxes. But employees don’t necessarily pay those taxes on all of their income.

Each year, a wage ceiling is introduced that determines how much income is taxed. Right now, the wage cap is $147,000, meaning earnings above that point aren’t subject to Social Security taxes. (Income above that point is also not taken into account when calculating monthly retirement benefits.)

Next year the wage ceiling will rise – significantly. Social Security taxes apply to income up to $160,200. That’s a big jump from this year, and it means higher earners will lose more of their money.

On the one hand, of course, it can be hard to feel bad for people whose salary is generous enough to be affected by this change. But in some parts of the country, $160,200 isn’t a lot of money — especially for people with multiple dependents. So all in all, this change will not sit well with many people.

2. A higher income requirement to earn work credits

Social Security does not automatically pay benefits to seniors once they reach a certain age. To be eligible for a benefit, you must accrue 40 credits in your life, with a maximum of four credits per year.

The value of a work asset can change over time. Right now it takes $1,510 in revenue to get a single work credit. In 2023, it will cost $1,640 to earn a work credit.

This change is not likely to be a problem for full-time employees. But part-timers may have to work longer hours or fight for higher wages if they want to make sure they get maximum credits in 2023.

Watch for changes in social security

When the rules around Social Security evolve, it can work in people’s favor – or not. Pay close attention to the changes that Social Security undergoes once a year. Even if you are not at an age where you can collect benefits, you can still be affected in a very significant way.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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