What Changes Are Coming to Social Security in 2023?

The biggest change to Social Security in 2023 results in more money in your pocket, due to the 8.7% cost-of-living adjustment (COLA). Retirement benefits are expected to increase by $147 on average. Other benefits, like disability and survivors, will also have higher monthly benefits due to the COLA. Tax caps will also rise in 2023 while Medicare premiums will be lower. If you choose to continue to work while receiving benefits in 2023, the reduction limits have also changed. Learn how these changes will affect your Social Security benefits in 2023.

  • Written by
    Lindsey Crossmier

    Lindsey Crossmier

    Financial Writer

    Lindsey Crossmier is an accomplished writer with experience working for The Florida Review and Bookstar PR. As a financial writer, she covers Medicare, life insurance and dental insurance topics for RetireGuide. Research-based data drives her work.

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    Lamia Chowdhury
    Lamia Chowdhury, editor for RetireGuide.com

    Lamia Chowdhury

    Financial Editor

    Lamia Chowdhury is a financial content editor for RetireGuide and has over three years of marketing experience in the finance industry. She has written copy for both digital and print pieces ranging from blogs, radio scripts and search ads to billboards, brochures, mailers and more.

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  • Reviewed By
    Brandon Renfro, Ph.D., CFP®, RICP®, EA
    Brandon Renfro, RetireGuide Reviewer

    Brandon Renfro, Ph.D., CFP®, RICP®, EA

    Retirement and Social Security Expert

    Brandon Renfro is a Retirement and Social Security Expert and financial planner. He focuses on helping clients create a secure financial future in retirement and co-owns Belonging Wealth Management. He is also a former finance professor and writes for several publications.

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  • Published: March 3, 2023
  • Updated: October 24, 2023
  • 5 min read time
  • This page features 9 Cited Research Articles
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How to Cite RetireGuide.com's Article

APA Crossmier, L. (2023, October 24). What Changes Are Coming to Social Security in 2023? RetireGuide.com. Retrieved June 21, 2024, from https://www.retireguide.com/social-security/changes/

MLA Crossmier, Lindsey. "What Changes Are Coming to Social Security in 2023?" RetireGuide.com, 24 Oct 2023, https://www.retireguide.com/social-security/changes/.

Chicago Crossmier, Lindsey. "What Changes Are Coming to Social Security in 2023?" RetireGuide.com. Last modified October 24, 2023. https://www.retireguide.com/social-security/changes/.

Key Takeaways
  • The COLA in 2023 will increase your benefits by 8.7%, which is the highest COLA in over 40 years.
  • While the full retirement age (FRA) isn’t changing in 2023, there are proposals to raise the FRA in the future.
  • The average Social Security benefit for retirees is $1,827 a month in 2023.
  • The Social Security tax cap is rising to $160,200.
  • Medicare premiums are lowering, which means less money will be taken out of your Social Security benefit.

Cost of Living Adjustment (COLA) Rises

The COLA for 2023 will raise your Social Security benefits by 8.7% in 2023. This is historically high compared to previous years. From 2010 to 2020, the COLA didn’t rise above 3.6%.

How the COLA affects your benefit varies, depending on the type of Social Security benefit you’re receiving and your own work history. The three main types of Social Security benefits are retirement, disability and survivors. Retirement benefits typically have the highest benefit amount, so they receive the highest COLA.

How the COLA Can Affect Your Benefit
If you are a:You should expect your benefit to increase by:
Retired worker$147
Aged widow(er)$136
Disabled worker$119

Note: these projected increases are based on the average benefit amounts from August 2022 with the addition of the 2023 COLA.

New Full Retirement Age Proposal

Due to funding gaps for Social Security and extended life expectancy, there is a proposal to raise the full retirement age (FRA) to 68 instead of 67.

If approved, the FRA would increase by two months each year until it reached 68. This is projected to fill 18% of the funding gap, according to AARP.

The idea of raising the FRA isn’t new — it’s already been done before. Originally, the FRA was 65 years old. Depending on when you were born, FRA has reached 66 and gradually rises to 67 for those born in 1960 and later.

Note that this proposal is not official yet and may not even pass.

FRA for 2023
If you’re turning 62 in 2023, your FRA is 67 years old. The same information was true for 2022. This is the first time since 2000 that two consecutive years have had the same FRA.

Increase in Social Security Benefits

Benefit amounts will increase for each type of Social Security benefit in 2023. Below is the average benefit amount from August 2022. By adding the COLA, we can get an estimate on the average benefit amount for 2023. Remember that this is an average estimate and there are many complex factors that go into calculating your benefit amount.

Increase in Social Security Benefits in 2023
Type of Beneficiary2022 Average Benefit Amount2023 Average Benefit Amount
Retired worker$1,680$1,827
Aged widow(er)$1,570$1,706
Disabled worker$1,364$1,483

Maximum Social Security Benefit Amount Increases

For retirement benefits and Supplemental Security Income (SSI), the maximum payable amount for Social Security rose for 2023.

Maximum Social Security Benefit Amounts for 2023
Retirement Benefits
If you retire at full retirement age in 2023, your maximum benefit amount is $3,627. If you retire at 62 in 2023, your maximum benefit amount is $2,572. If you wait until you turn 70 to receive benefits in 2023, your maximum benefit amount is $4,555.
SSI
With SSI, the monthly maximum amounts are $914 for an individual, $1,371 for an eligible individual with an eligible spouse and $458 for an essential person in 2023.

Higher Social Security Tax Cap

The maximum earnings subject to Social Security taxes rose by $13,200, up to $160,200. This means more of your earnings are going to be subject to taxes if you’re still working in 2023.

This is a high jump compared to previous years. From 2017 to 2022, the annual maximum tax cap increase didn’t exceed $5,100. The jump of $13,200 is over double the usual increase.

2022 vs. 2023 Social Security Tax Cap
20222023
$147,000$160,200

Social Security Adjusts Benefit Reduction Amounts

If you continue to work while receiving Social Security, your benefit amount could be reduced, depending on how old you are when you start receiving benefits. If you are at your full retirement age or older already, you won’t face any deductions.

If you’re younger than your FRA and start receiving benefits, your earnings limit is $21,240. If you earn over $21,240 in 2023, $1 of the excess benefits will be deducted for each $2. For example, if you earned $31,240, only $10,000 will be deducted.

If you are reaching your FRA in the year that you started collecting benefits, the earnings limit increased to $56,520. $1 will be deducted for each $3 earned over the earnings limit.

Earning Limits and Deductions for 2023
Your AgeEarnings LimitAmount Deducted
If you're younger than your full retirement age$21,240$1 for each $2 over the earnings limit
If you’re becoming your full retirement age this year$56,520$1 for each $3 over the earnings limit
If you are your FRA already, or olderNoneNone

Lower Medicare Premiums

Because Medicare premiums can be deducted from your Social Security benefit, a lower premium means more money back in your pocket.

Kilolo Kijakazi, Acting Commissioner of the Social Security Administration, was quoted in a press release in reference to lower Medicare premiums.

Medicare premiums are going down and Social Security benefits are going up in 2023, which will give seniors more peace of mind and breathing room. This year’s substantial Social Security cost-of-living adjustment is the first time in over a decade that Medicare premiums are not rising and shows that we can provide more support to older Americans who count on the benefits they have earned.
Kilolo Kijakazi Acting Commissioner of the Social Security Administration

Medicare Part B, which is automatically deducted from your monthly benefit, is $164.90 in 2023.

Medicare Advantage, also known as Part C, and Part D can also be deducted from your Social Security benefit. With Part C and D, you’d need to contact your insurer to arrange the deduction. It doesn’t happen automatically like with Part B.

In 2023, the average Part C premium is $17.86 a month. The average Part D premium is $56.49 a month.

Part A doesn’t typically charge Medicare beneficiaries a premium, so it doesn’t influence your Social Security benefit.

To help you get a better idea of how much you’ll retain in your Social Security benefit, refer to the table below comparing premium amounts from 2022 and 2023. Remember that the premium amounts for Part C and D are the average estimates. Prices vary widely by state and insurer. With Part B, everyone has the same premium amount.

2022 vs. 2023 Premiums
Medicare Part2022 Premium2023 Premium
Part B$171.10$164.90
Part C$19$17.86
Part D$39$56.49
Last Modified: October 24, 2023

9 Cited Research Articles

  1. Social Security Administration. (2023, January 3). What Is Full Retirement Age? Retrieved from https://faq.ssa.gov/en-us/Topic/article/KA-01885
  2. Social Security Administration. (2023, January 3). What Is the Maximum Social Security Retirement Benefit Payable? Retrieved from https://faq.ssa.gov/en-us/Topic/article/KA-01897
  3. Social Security Administration. (2023). Cost-of-Living Adjustment (COLA) Information for 2023. Retrieved from https://www.ssa.gov/cola/
  4. Social Security Administration. (2023). SSI Federal Payment Amounts for 2023. Retrieved from https://www.ssa.gov/oact/cola/SSI.html
  5. Social Security Administration. (2022, December). Effect of COLA on Average Social Security Benefits. Retrieved from https://www.ssa.gov/oact/cola/colaeffect.html
  6. Social Security Administration. (2022, October 13). Social Security Announces 8.7 Percent Benefit Increase for 2023. Retrieved from https://www.ssa.gov/news/press/releases/2022/#10-2022-2
  7. AARP. (n.d.). The Future of Social Security: 12 Proposals on the Table in Washington. Retrieved from https://goyff.az.gov/sites/default/files/meeting-documents/materials/social_security_options.pdf
  8. Social Security Administration. (n.d.). Cost-Of-Living Adjustments. Retrieved from https://www.ssa.gov/oact/cola/colaseries.html
  9. Social Security Administration. (n.d.). Maximum Taxable Earnings. Retrieved from https://www.ssa.gov/benefits/retirement/planner/maxtax.html