Early Social Security Claimers, Prepare for This Big Change in 2023

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We’re just weeks away from learning what kind of cost of living adjustment (COLA) Social Security beneficiaries can expect to see in 2023. While that’s a pretty big deal, it’s not the only exciting change coming up next year.

Employees who claim Social Security early may notice a difference in their checks that has nothing to do with the COLA. Below we look at what this is and to whom it applies.

Image source: Getty Images.

What does it mean to claim Social Security early?

You can register for social security from the age of 62. But you must wait until your full retirement age (FRA) to claim the benefit you earned based on your work history. The table below will help you determine your FRA.

year of birth

Full Retirement Age (FRA)

1943 to 1954

66

1955

66 and 2 months

1956

66 and 4 months

1957

66 and 6 months

1958

66 and 8 months

1959

66 and 10 months

1960 and later

67

Data source: Social Security Administration.

Claiming benefits before your FRA is considered early claiming. Doing this will give you more checks, but each check you get will be smaller. If you apply at age 62 and your FRA is 67, you will only get 70% of your full benefit by check, or 75% if your FRA is 66.

Claiming Social Security early also poses another problem for those who are still working. But in 2023, they’ll have a little more breathing room before they have to worry about it.

This can help you keep more of your Social Security checks

The Social Security Administration withholds some retirement benefits from early claimants with excessive annual income. In 2022, you will lose $1 for every $2 you earn over $19,560 if you stay below your FRA all year. On the other hand, if you hit your FRA in 2022, you’ll lose $1 for every $3 you make over $51,960, assuming you earn this much before your birthday. This is known as the Social Security Income Test. The government does not withhold money from the Social Security checks of those who are at or above their FRA, regardless of income.

If the government withholds some money from your checks, it’s not gone forever. Once you reach your FRA, your benefit will be recalculated and you will be given slightly larger checks to compensate for what it withheld previously. That said, it can still be frustrating to lose some of your Social Security benefits, even for a short time.

Fortunately, the thresholds for the merit test will probably rise in 2023. That means while you claim Social Security for your FRA, you can earn a bigger amount before you have to worry about the government taking anything from your checks.

The government has not yet officially announced the new income thresholds for 2023, but they are increasing every year, so we can expect them to exceed the limits mentioned above. That said, some high earners may still receive smaller checks due to the income test if they claim benefits under their FRA. Those who want to avoid this may want to consider deferring Social Security benefits altogether.

Doing so will give you even more money when you eventually sign up. For every month you delay, Social Security will increase your checks until you hit your maximum benefit at 70 — if your FRA is 67, that’s 124% of your full benefit per check, or 132% if your FRA is 66.

Procrastinating can be the wisest step for your finances if you expect to be in your 80s or older and in the meantime you can comfortably pay your bills without help from Social Security. But if you want to claim early, you should be aware of the earnings test and what it can do to your benefits. Plan accordingly so that you are not surprised if the government withholds some of your checks.


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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