Social Security 2023: Reduction In Payments

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Social Security

The Social Security program has proverbially taken retired people under its wing and given them some level of financial security for over eighty years.  

What you receive from Social Security and how much of your payout you get to keep depends on more than a dozen variables. For instance, Social Security payouts are currently subject to some kind of taxation from the federal government and 12 states.

But when it comes to determining retired worker benefits, four things stand out above all others: work history, earnings history, full retirement age, and claiming age.

Social Security Payments Will Be Reduced

In reality, the first two are linked at the hip. Your 35 highest-earning, inflation-adjusted years are taken into consideration for calculating your monthly retired worker benefit at full retirement age (FRA) by the Social Security Administration (SSA). Working for at least 35 years is just as important. The SSA averages a $0 into your monthly estimate for each year you worked that was less than 35.

Your FRA is the age at which you are qualified to collect your retired worker benefit in full. Your birth year, over which you have no influence, determines it.  

Your claiming age is the fourth consideration and the one I’d call most crucial to swaying the payout pendulum. Benefits for retired workers can be requested as early as age 62. The Social Security program, however, rewards patience. Your monthly benefit might increase by as much as 8% for each year you put off accepting your settlement. This increase in payout lasts until age 70.