Social Security Changes For 2023

Posted on Tuesday, December 20, 2022

As the year end nears, those receiving or eligible for social security payments eagerly await the annual cost of living adjustments (COLA).  This year looked to be one that provided higher adjustments than in recent years.  That turned out to be the case. 

Monthly social security benefits will increase by 8.7%, reflecting the increase that we’ve seen to the rate of inflation in 2022.  This means that the average social security benefit will be $1,827 per month starting in January 2023, and the maximum benefit available to someone retiring at their full retirement age is $3,627.  This is the highest COLA since 1981. 

Of course, your social security check will not increase by an exact 8.7%, because Medicare premiums are also changing.  For 2023, the standard Medicare premium for Part B will be about 3% less, or $164.90 per month. 

If you are working and receiving social security benefits prior to your full retirement age (FRA), you will want to know that the amount you can earn in 2023 without losing any benefits is $21,240.   If you reach your FRA in 2023, the amount is $56,520.  The penalty is losing $1 in benefits for every $2 in earnings above the limit in years before your FRA.  You will lose $1 for every $3 you are over the limit in the year you reach your FRA. 

For those who are working and still contributing the Social Security through payroll deductions or self-employment tax, the maximum amount of earnings subject to tax has increased to $160,200 from $147,000. 

According to the Social Security office, increased benefit checks will begin on December 30, 2022.  To see your exact increase amount, you can access your COLA notice online at www.ssa.gov. 

Posted in Tax Topics For Individuals

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