Biggest Social Security changes for 2023 (2024)

Social Security benefits will get their biggest boost in decades in 2023, thanks to 2022’ssurging 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.

Bigger benefits

Rampant inflation produced an8.7 percent cost-of-living adjustment(COLA) for Social Security beneficiaries in 2023, thebiggest percentage jump since 1981. That translates into a $146 boost in the average monthly retirement benefit, from $1,681 to $1,827.

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Themaximum benefitfor a worker who claims Social Security atfull 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 toSupplemental 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).

No Medicare premium offset

In 2022, a5.9 percent COLAraised the average retirement benefit by $92 a month. But arecord-high hikein 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 thestandard Part B premium declinesfrom $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 arelargely fundedfrom 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.

Social Security earnings limits

People receiving retirement,survivorandfamily benefitswho have not yet reached full retirement age may have a portion of their Social Security payments temporarily withheld if they continue to work and have earnings above a certain level.

Thisearnings testchanges annually in line with national wage trends. In 2023, the threshold is $21,240 for beneficiaries who will not reach full retirement age until a later year (up from $19,560 in 2022). For every $2 in annual work income above that limit, the SSA withholds $1 in benefits.

If you will reach FRA in 2023, Social Security withholds $1 in benefits for every $3 in earnings above $56,520 (up from $51,960 in 2022) until the month when you hit the milestone. At that point, theearnings test goes away— there’s no benefit deduction, no matter how much you earn. In addition, the SSA adjusts your benefit upward so that over time, yourecoup the prior withholding.

There’s a separate earnings rule for those receivingSocial Security Disability Insurance(SSDI). Because this benefit is intended for people who are largely unable to work for an extended period due to aserious medical condition, you can lose it if your income exceeds a threshold for“substantial gainful activity,”as the SSA calls it.

In 2023, that threshold rises from $1,350 to $1,470 a month for most disabled beneficiaries. People receiving SSDI on the basis of blindness can earn up to $2,460 a month from work in the coming year, up from $2,260 in 2022.

Qualifying for benefits

You becomeeligible for benefitsby collectingSocial Security credits, which you earn by doing “covered” work — a job or self-employment in which you pay Social Security taxes on your income. In 2022, you got a credit for earnings of $1,510; in 2023, that goes up to $1,640.

You can earn up to four credits a year, equivalent to $6,560 in income in 2023. It takes 40 credits, or 10 years of covered work, to qualify for retirements benefits.

You must also compile credits toqualify for SSDI, but the number required can range from six (or a year and a half of work) to 40, depending on your age when you became disabled.