Social Security turns 88 on August 14 – and there are some changes in store in 2023. 

Congress has made a number of changes to Social Security in recent years – chief among them the increase in the retirement age. The full retirement age is 66 for those born between 1943 and 1954, but gradually increases for people born after that until it reaches 67 for those born in 1960 or later.

“For people turning 62 in 2023, their full retirement age will be 67. Those born between August1956 and June of 1957 will hit their full retirement age of 66 in 2023,” says Matthew Schwartz, a financial planner with Great Waters Financial in Minneapolis, Minnesota

Social Security Changes

The biggest change for 2023 was the 8.7 percent cost-of-living increase for Social Security recipients, effective in January. But several other changes happen as well:

• The maximum earnings subject to Social Security increased to $160,200 from $147,000. This is part of the effort by Congress to extend the solvency of the Social Security fund. Even with these increases, the trust fund reserves are expected to be exhausted by 2037 if Congress does not act.
• For those who claim Social Security benefits early and continue to work, earnings limits increased in 2023. Those early retirees can earn up to $21,240 in 2023, up from $19,560, according to the Social Security Administration. After that $1 will be deducted from your check for every $2 you earn that exceeds the limit.

Also, the once-popular file and suspend tax strategy for couples will end for those who were grandfathered in when the Bipartisan Budget Act of 2016 eliminated the tax strategy for those born after Jan. 1, 1954. It was basically a claiming strategy that allowed the lower-earning spouse in a marriage at full retirement age to claim spousal benefits and delay their own benefits until a future date when they are higher.

“The opportunity for anybody to execute those strategies is going to end up going away by the end of this year,” says Schwartz. “These are no longer strategies that would ever make sense because everybody who is born before January 1, 1954, is going to be at least 70 years old by January 1 of 2024.

Age 70 is when people qualify for their maximum Social Security benefit. “So, it’s kind of coming up on the official end of the restricted application and file system on January 1, 2024,” he says.

For example, Schwartz says he has a client who barely squeaked by the cutoff date in which some were grandfathered in, barely making the cutoff date, meaning she was grandfathered in. Her husband was already withdrawing his benefit, so she was drawing the spousal benefit for the past several years while her own benefit grew at 8 percent a year.

“So, in December, she is going to switch her Social Security benefit from the spousal election to her primary benefit, which is now maxed out,” he says.

Most experts expect more changes to come from Congress which must act to stabilize the system. Among those changes are expected increasing or eliminating the cap on maximum earnings subject to Social Security and again increasing the age for full retirement benefits.

“They’ve consistently made tweaks to the program,” says Schwartz. “And they can certainly look to continue to make those tweaks. They can increase the full retirement age again, which would help, though it’s tough to read the tea leaves and we don’t want to speculate too much.”

Social Security Survivor Benefits Not Impacted

These changes affect SS Retirement benefits, not Survivor Benefits. Anyone collecting Survivor Benefits due to the death of a spouse can still switch to their own SS Retirement Benefit at age 70 if they wish.

YOUR TURN

What do you think of these changes in Social Security? What do you think should be done to keep it solvent?Let us know in the comments!

Rodney A. Brooks is the former deputy managing editor/Money at USA TODAY. His retirement columns appear in U.S. News & World Report and Senior Planet.com. He has written for National Geographic, The Washington Post and USA TODAY. The author of “Fixing the Racial Wealth Gap,” Brooks has testified before the U.S. Senate Special Committee on Aging. His website is www.rodneyabrooks.com.

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