4 Important Changes to Social Security in 2023

The Census Bureau calls Social Security the nation’s most important antipoverty program. Social Security benefits provide monthly income to millions of retired workers, spouses, survivors, and disabled workers. In fact, about 1 in 5 Americans received a Social Security check each month in 2021, and those benefits kept more than 26 million people out of poverty.

Given the impact Social Security has on financial wellbeing, it is critical for beneficiaries (and future beneficiaries) to stay informed on annual changes to the program. Here are four important changes coming to Social Security in 2023.

Image source: Getty Images.

1. The largest cost-of-living adjustment (COLA) since 1982

Social Security benefits get an annual cost-of-living adjustment (COLA) to help beneficiaries keep up with inflation. Of course, rising prices have dominated the headlines during the past year, as the consumer price index (i.e. a widely used measure of inflation) rose at its fastest pace in four decades, putting many Americans in a difficult financial position.

To rebalance the scales, Social Security benefits will get an 8.7% COLA in 2023. That ranks as the largest raise for beneficiaries since 1982, and the fourth-largest raise since COLAs became automatic in 1975. Using data from November 2022, I have calculated how the COLA in 2023 will impact the average monthly benefit for different types of beneficiaries.

Retired workers: $1,823.46 (an increase of $145.94)
Spouses: $902.52 (an increase of $72.23)
Survivors: $1,446.67 (an increase of $115.78)
Disabled workers: $1,482.97 (an increase of $118.69)

2. A bigger maximum benefit for retired workers

The Social Security benefit paid to retired workers depends on income and age. Specifically, a formula is applied to the inflation-adjusted earnings from a worker’s 35 highest-paid years, and the output of that formula is their primary insurance amount (PIA). The PIA is the benefit the worker would receive if they started Social Security at full retirement age (FRA). Workers that claim Social Security early are penalized with a reduced benefit, and workers that delay Social Security are rewarded with an increased benefit.

The PIA formula is adjusted annually to account for changes in general wage levels, which causes the maximum benefit to rise each year. The chart below shows the maximum monthly benefit payable to retired workers at different ages in 2023.


62 years old

Full Retirement Age

70 years old

Maximum Monthly Benefit




Data source: Social Security Administration.

3. A higher retirement earnings limit for workers under full retirement age

Individuals who get Social Security retirement benefits are allowed to continue working, but individuals under FRA will have a portion of their benefits withheld if they exceed certain thresholds. Specifically, there are two different income limits — a lower amount for individuals under FRA for the whole year, and a higher amount for individuals that will reach FRA during the year.

The income limits (also known as the retirement earnings test exempt amounts) for 2023 are detailed below:

Lower amount: Individuals with annual incomes that exceed $21,240 will have $1 in benefits withheld for every $2 in earnings above the limit.
Higher amount: Individuals with incomes that exceed $56,520 prior to reaching FRA will have $1 in benefits withheld for every $3 in earnings above the limit.

Anyone can use this calculator from the Social Security Administration to determine what portion of their benefits will be withheld.

4. A higher maximum taxable earnings limit

The Social Security program is funded in large part by tax dollars. Most employees have 7.65% of their paychecks deducted for FICA (Federal Insurance Contributions Act) tax, and 6.2% goes to the Social Security program, while the remaining 1.45% goes to the Medicare program.

However, there is a cap on earnings subject to Social Security tax. The maximum taxable earnings limit will rise to $160,200 in 2023, up from $147,000 in 2022. That means high earners will pay a little more into the Social Security program next year.

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