The Social Security Administration announces changes to benefits for retirees every October, including an annual cost-of-living adjustment required by law.
While this adjustment will be not released for several more months, other modifications to the benefits of Social Security recipients have arisen in 2023. On average, Social Security will replace about 40% of a person's annual pre-retirement earnings, according to the SSA.
A LOOK AT WHAT PROGRAMS COULD BE AFFECTED IF THE US DEFAULTS ON ITS LOANS
1. Average Social Security benefit
The Social Security Administration reported that the average retired worker receives around $1,833 per month as of March. The benefit amount is calculated based on several factors, including the amount of time a person has worked, the applicant's total lifetime earnings, and the age when one filed for benefits.
The SSA calculated in December 2022 that the 8.7% COLA would increase the average total that retired workers receive each month by $147, which became effective in January 2023.
2. Medicare recipients taking home more benefits
The standard monthly premium for Medicare Part B dropped to $5.20 per month in 2023 due to a spending decrease on the Alzheimer's drug Aduhelm, according to the Center for Medicare Advocacy. Those who receive Medicare benefits have earned some extra money during each payout since the change.
As of September 2022, over 65 million people were enrolled in Medicaid, according to the Center for Medicare Advocacy.
3. The Social Security wage cap climbed
The Social Security wage cap has been increasing by nearly 25% over the past five years, from $128,400 in 2018 to $160,200 in 2023, according to the Society for Human Resource Management. Employers and employees pay 6.2% of their wages up to the taxable maximum, according to the SSA. However, most people earn below the wage cap and are taxed the same percentage of their incomes into Social Security.
4. Increased work hours without affecting benefits
It is possible to work and earn Social Security benefits simultaneously, but if a person is below the full retirement age and brings in more than the yearly earnings limit, the benefits will be reduced.
However, starting in 2023, Social Security recipients can make more than they could last year without the money negatively affecting their benefits. If a recipient is under the full retirement age for the year, Social Security will deduct $1 from benefit payments for every $2 the worker earns above the annual limit. The total limit for 2023 is $21,240. If a person reaches the full retirement age this year, Social Security will deduct $1 for every $3 earned above $56,520.
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5. Social Security's Old Age and Survivors Insurance Trust Fund to run out earlier than expected
The retirement trust fund for Social Security is expected to run out in 2033, one year earlier than previously assumed, according to an SSA March report. The data show that the trust fund that, in part, covers Medicare Part A hospital benefits will run dry in 2031. The new date follows the program lowering gross domestic product and labor productivity as inflation increases in the United States.
Congress can enact changes to increase funds — otherwise, Social Security will only be able to give out 77% of its benefits.