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Every year, it seems Social Security and Medicare get more and more confusing. It’s frustrating, for sure, and many people simply don’t know where to start — or what they are entitled to — as they near retirement. These people often look to their employer for guidance and information for transitioning to the next phase of life. To do this, employers have to stay up to date on the latest Social Security and Medicare trends and changes. If you’re an employee, it’s important to have the right information to help you make the best decisions for your long-term financial security, healthcare coverage, and other retirement-related considerations.
Knowing what Social Security and Medicare provide in retirement and when to start benefits is key. Let’s start by examining some high-level changes related to cost-of-living, taxable earnings, full retirement age, and Medicare premiums and deductibles.
On October 13, 2022, the Social Security Administration (SSA) announced their 2023 figures. As it turns out, Social Security beneficiaries will receive a huge 8.7% cost-of-living adjustment (COLA) for monthly benefits payable in 2023 — the largest increase since 1981! The COLA is based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). For the average retired worker, the increase is about $146 a month for a monthly benefit of $1,827.
The Social Security taxable earnings base will increase to $160,200 in 2023 from $147,000 in 2022. There are about 179 million working people paying this combined 7.65% payroll tax, matched by their employers, to support these programs.
In 2023, the full retirement age (FRA, or the age at which a person may first become entitled to full or unreduced retirement benefits) will be 66 and 6 months for people born January 2, 1957 through January 1, 1958. However, keep in mind that, for Social Security and Medicare purposes, the FRA is established on the day before an individual’s birthday. So, for example, someone born on January 1 is considered to have been born in the previous year.
For more examples on when different individuals reach FRA, reference the Social Security figures in the table below.
On September 27, 2022, the Centers for Medicare and Medicaid Services (CMS), an agency under the U.S. Department of Health and Human Services (HHS), released the 2023 Medicare premiums and deductibles. Here are some highlights related to increases:
The following table provides even more in-depth comparisons between 2022 and 2023 Social Security and Medicare figures, including both increases and decreases.
$750,000 or more
The Social Security and Medicare information above only covers a small percentage of the information in Mercer’s retirement-related products. Now in its 51st edition, the Mercer Guide to Social Security is one of the most popular and trusted Social Security and Medicare products on the market. This booklet gives an easy-to-understand explanation of retirement, survivor, and disability benefits, including over 25 real-life examples and solutions.
Meanwhile, Mercer’s Medicare booklet explains exactly what you need to know about Medicare in simple, practical terms. For more information or to order either booklet, please visit www.imercer.com/retirement.
This data is designed to help you or your employees properly prepare for a well-deserved retirement. After all, there’s nothing better than peace of mind when it comes to your employees’ financial security and healthcare coverage.