Of course, the big story about Social Security in 2023 is the highest Cost Of Living Adjustment (COLA) in 41 years. To help ease some of the pain caused by inflation, the 8.7% COLA will be payable to over 65-million Social Security beneficiaries starting in January, 2023. According to the SSA.gov Fact Sheet, the average retired Social Security recipient will receive $1,827 a month in 2023, up $146 from $1,681 in 2022.
Though this is good news for federal retirees receiving a FERS/CSRS annuity and Social Security benefits, other changes to Social Security for 2023 will affect federal workers who have not yet retired.
“Also known as the Social Security tax cap, the maximum taxable earnings is the limit on the amount of your earnings that is taxed by Social Security.”
2023 Maximum Taxable Earnings Increase
For FERS/CSRS Offset participants who pay into Social Security through payroll taxes, your maximum taxable earnings for 2023 increased to $160,200 from $147,000 in 2022. This means an additional $13,200 of your earnings may be subject to Social Security taxes.
Also known as the Social Security tax cap, the maximum taxable earnings is the limit on the amount of your earnings that is taxed by Social Security. With a tax cap bump of nearly 9%, it’s considerably higher than previous years. Here’s why: the taxable wage cap is adjusted each year based on increases in the national average wage index. In 2022, wage increases outpaced previous years due, in part, to the post-COVID economy and the surge in inflation.
If You Plan On Working After You Retire From Your Federal Career
Though your FERS/CSRS annuity is not affected by any earnings from employment after your retire, your Social Security benefits can be reduced if you are younger than your FRA under Social Security rules. For those born in 1960, the FRA is now age 67 and it will remain at age 67 for everyone born in 1960 or later.
If you’re under your FRA and working while receiving Social Security benefits, you’re subject to the Retirement Earnings Test Exempt Amounts. For 2023, the exempt amount is $21,240 per year. One dollar in Social Security benefits will be withheld for every $2 in earnings above this limit.
The 2023 exempt amount for those who turn their FRA in 2023 is $56,520 per year. One dollar in benefits will be withheld for every $3 in earnings above the limit. The limit applies only to earnings for months prior to turning your FRA. Once you turn your FRA, the Earnings Test ends and your benefit amount will be recalculated to give you credit for the months the SSA reduced benefits due to your earnings.
