The end of federal stimulus checks has shifted the focus on the Social Security payments that sustain millions of retired, disabled, survivors of deceased workers, and the dependents of beneficiaries. With the 2023 Social Security benefits payment schedule for 2023 released, it is important to again focus on managing one’s retired life and keeping track of the yearly tweaks and adjustments in your Social Security each year and managing and adjusting the budget accordingly.
Social Security replaces part of a worker’s pre-retirement income which is based on their lifetime earnings. The part of the pre-retirement saving that the Social Security payment replaces is based on certain calculations. It includes the highest earning of the worker in 35 years and varies depending on the income and the time one chooses to start benefits.
It is easy to overlook minor details which are also vital. These include when benefit checks are distributed. This is important as this issue is not transparent and clear-cut, varying among persons.
The 2023 Social Security benefit payment schedule will clear that up to a large extent. With half of all senior Americans residing in homes where SS benefits are over 50% of the total household income, 25% of households depend on these monthly stimulus checks for almost all or even all their earnings.
Subject to the birthday of the retiree, the Social Security survivor, retirement, and disability benefits are sent out on the 2nd. 3rd, or the 4th of every month. All beneficiaries who have been receiving benefits starting before May 1997 now all have their payments distributed on the 3rd Wednesday of each month.
Starting January 2023, around 64M Americans are set to get 8.7% additional payments to make up for COLA. This is added to their Social Security retirement, survivor, and disability payments. Supplementary Security Income (SSI) benefits will also be boosted by the cost-of-living-adjustment.
With inflation touching record levels and in the absence of any more federal stimulus checks, at least not till the midterms, this is a vital addition to household income and is the largest after 11.2% was added in 1981. The largest increase was 14.3% in 1980.
Following the COLA adjustment for 2023, the average benefit per month is expected to rise to a healthier $1,827 for individual retired people and $2,972 for joint beneficiaries. The average increase in disability benefits works out to $1,483 a month.
For disabled personnel with spouses and children, the increase works out to $2,616 a month. Widowers and widows are set to receive an enhanced benefit of $1,704 a month while a widowed parent with at least 2 children will get a much bigger average check of $3,520 a month.
Other key changes for 2023 are that the maximum sum that is subject to Social Security tax increases to $160,200. The earning limits for beneficiaries still in the workforce and are of a lesser age than the maximum age for retirement have been increased to $21,240, while the beneficiaries earning limit for those reaching the full age of retirement next year has been increased is now $56,520.
The Basis Of The Social Security Payments
The Old-Age, Survivors, and Disability Insurance (OASDI) program, or simply the Social Security is a monthly monetary payment benefitting millions of workers, their dependents, or survivors. It is an entitlement program with funds financed by employees, employers, and the self-employed with Social Security taxes. The money collected is invested into a couple of trust funds under Social Security.
The eligibility and the benefit amount are based on the contribution of the individual to the Social Security fund and the work history of the employee, their parents, or spouse.
The Social Security Payment Categories
The social security payment from the SSA is broadly divided into three categories or types. The commonest variety that draws the maximum beneficiaries is retirement benefits which start for individuals at the age of 62 and who have worked for a minimum of 10 years. The retirement benefits received on retirement depend on the pre-retirement wages on which the benefits are calculated. Besides that, the spouse of a retiring person may also be entitled to retirement benefits even though they may be divorced and have not paid into the program.
Disability is the second category on which workers may collect Social Security (SSDI) insurance benefits. But even here the workers should have worked earlier for at least a stipulated period. The number of years that they should have worked to claim the benefits depends on the number of years the beneficiary has worked before being disabled, and also on their age at the time of the disability. The monthly Social Security Disability Insurance depends on the pre-disability wages or salary similar to retirement benefits.
Stimulus Check benefits for survivors are generally for widowers and widows, divorced spouses who qualify, and children of deceased workers and retirees after their death. Against the benefit, the amount is linked to the worker’s wages and age at the time of their death. An extra death benefit is granted, a one-off payment of $255 distributed to children or spouses of the deceased retiree at the time of death.
The fourth benefit that is not truly a part of Social Security made available by the Social Security Administration is the Supplemental Security Income (SSI). This program is based on need and helps out those individuals with limited resources and income who are incapable of earning for multiple reasons.
Stimulus Checks Have No Bearing On Social Security Payments
Immediately after the third stimulus check was sent out by the federal administration, the Social Security Administration announced that pandemic-related stimulus checks would no longer be counted as income while determining eligibility or for calculating benefit amounts for Supplemental Security Income (SSI).
The change was retroactive as by that period millions of stimulus checks had already been sent out. Social Security stated that it would restore the SSI payments for recipients whose benefits were terminated or reduced. Such people had received the series of stimulus checks earlier before the change in rules was announced in August 2021.
The Stimulus Check issue arose from the role that income played in determining the eligibility for Supplemental Security Income, which is need-based and benefits disabled and old people who had limited financial resources at their disposal.
This SSA-administered program was giving out close to 8 million monthly SSI benefits of which a third was 65 or older. The SSA reviewed records that went back to the start of the pandemic to identify SSI beneficiaries whose payments were either terminated or reduced as they received stimulus checks.