Social Security benefits will get their biggest boost in decades in 2023, thanks to 2022’s surging consumer prices. Inflation and rising wages mean a host of other changes for the tens of millions of retirees, disabled workers and members of their families who rely on the program. Here’s what’s in store for the year to come.
Rampant inflation produced an 8.7 percent cost-of-living adjustment (COLA) for Social Security beneficiaries in 2023, the biggest percentage jump since 1981. That translates into a $146 boost in the average monthly retirement benefit, from $1,681 to $1,827.
The maximum benefit for a worker who claims Social Security at full retirement age (FRA) in 2023 will be $3,627 a month, up from $3,345 in 2022. FRA is 66 years and 4 months for people born in 1956 and 66 and 6 months for those born in 1957; people born from Sept. 2, 1956, through July 1, 1957, will reach it in 2023.
The COLA is applied to all types of Social Security payments and to Supplemental Security Income (SSI), a safety-net benefit for older, blind and disabled people with low incomes and limited assets that is administered by the Social Security Administration (SSA).
|Estimated Average Monthly Social Security Benefits Payable in January 2023|
|Before 8.7% COLA||After 8.7% COLA|
|Married couple, both receiving benefits||$2,734||$2,972|
|Survivor benefit, older spouse||$1,567||$1,704|
|Survivor benefits, widowed parent and two qualifying children||$3,238||$3,520|
|SSI maximum federal benefit, individual*||$841||$914|
|SSI maximum federal benefit, married couple*||$1,261||$1,371|
* SSI beneficiaries should receive their first COLA-boosted payment Dec. 30, 2022. SSI benefits are typically paid on the first of the month, but Jan. 1 is a federal holiday.
Source: Social Security Administration
No Medicare premium offset
In 2022, a 5.9 percent COLA raised the average retirement benefit by $92 a month. But a record-high hike in Medicare Part B premiums undercut that increase for the majority of Medicare enrollees whose Part B premiums are deducted directly from Social Security payments.
That won’t be the case in 2023, as the standard Part B premium declines from $170.10 a month to $164.90, leaving many beneficiaries with a few extra dollars in their monthly Social Security deposits.
Social Security taxes
Social Security benefits are largely funded from a 12.4 percent tax on work earnings, typically split between employee and employer. (If you work for yourself, you pay both shares.) The tax rate hasn’t changed in years, but the amount of income subject to it increases in line with the COLA.
In 2022, you paid Social Security taxes on work income up to $147,000. In 2023, the threshold rises to $160,200. You won’t pay into Social Security on earnings above that level, nor will your employer.