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Social Security Announces 8.7% Benefit Increase for 2023

If you’re receiving Social Security, you’ll see the adjustment in your check or direct deposit in January, when December benefits are paid. But there's more - our expert explains.

By Alyson Dorosky

Social Security announced today that the cost-of-living adjustment (COLA) for its retirement and disability benefits will be 8.7% in 2023. With this, Social Security will bestow its most significant “raise” since the 11.2% increase in July 1981 – one that current beneficiaries may remember their grandparents celebrating.

Alyson Dorosky, CSSCS, is head of Social Security Support for LifeYield. She has seen thousands of different Social Security scenarios in five years of working with advisors and their clients to customize filing strategies and maximize retirement income.

Alyson Dorosky

The 41-year record boost in benefits is due to inflation – currently running at 8.2% – that has driven up the costs of almost everything: fuel, food, rent, cars and essential services, including healthcare (a key one for seniors).

If you’re receiving Social Security, you’ll see the adjustment in your check or direct deposit in January, when December benefits are paid. The Social Security Administration (SSA) mails COLA statements to beneficiaries in December. You will also be able to find yours later this year when you sign into your account at

Here are answers to your questions about the COLA and Social Security.

How does Social Security calculate my new benefit starting in January?

Social Security applies the COLA to your primary insurance amount (PIA) – the amount that you receive if you file (or filed) for benefits at your full (also called “normal”) retirement age.

That amount is then adjusted, depending on the benefit you applied for – early (at age 62), at your full retirement age (FRA) or later, up to age 70. Visit and sign in to see how Social Security calculates your benefit.

Is there anything else that affects what I’ll receive in my payment in January?

Oh, yes.

To start, your benefits are based on the taxes you paid into Social Security through paycheck deductions or directly. People who earn higher incomes while working receive higher Social Security benefits. Social Security does, however, pay more proportionately to people whose wages were lower while working.

Other standard deductions for healthcare benefits or income taxes affect the amount that lands in your bank account, too, such as if you:

Signed up for Medicare Part B, which covers doctor’s visits and other healthcare services. Social Security automatically deducts the premium from your benefit. The good news for 2023 is that Medicare announced that Part B premiums would be lower than this year.

Have Medicare Advantage and Part D prescription plans. You may have asked your insurers to arrange to withhold your premiums from your Social Security benefit. (Enrollment in 2023 plans begins in a few days on Oct. 15.)

Arranged to have income tax withheld from your Social Security benefit.

Some have noted that the COLA will push some beneficiaries into higher tax brackets. If you’re concerned about that, contact your accountant or tax advisor.

I’m not collecting Social Security yet. How does this affect me?

Don’t worry! When you file for Social Security benefits, the SSA will calculate your PIA and then increase it based on the sum of the COLA increases between the time you turned 62 and the age you applied for benefits.

If you haven’t filed yet, delayed retirement credits accumulated by filing after your full retirement age on top of COLAs can significantly boost your monthly benefit amount. That’s another argument for delaying filing until your benefits max out at age 70 if you can.

Should I file now to get the raise?

No! Not if that’s your only reason.

There are many factors in deciding when to file for Social Security benefits. Married couples must also put their heads together because of the potential effects on spousal and survivors’ benefits.

The complexity and consequences of Social Security decisions are why I always recommend consulting a financial or tax advisor with advanced software for calculating benefits and modeling different filing strategies to see which works best for your situation.

An adviser can also help you comprehensively review your assets and your expenses in retirement. Social Security replaces approximately 40% of what you earn while working. To retire with peace of mind, you’ll want to be reasonably confident in where the other 60% will come from for the rest of your life.

Read Expert Advice on Social Security's 8.7% COLA

I’m thinking of taking a part-time job to help pay the bills. How will that affect my Social Security benefits?

It depends on how old you are and when you began collecting benefits. If you are above your full (or what Social Security sometimes calls your “normal”) retirement age for the entire year, there’s no limit to how much you can earn and still collect Social Security.

It’s different if you filed for benefits before your full retirement age or if this is the year you reached it. Then, Social Security limits how much you can earn without repaying some of your benefits. This is called the “retirement earnings test.” The SSA announces the limits annually.

Even if you decide to take a job and forfeit some of your Social Security benefits, that’s only limited to when you are working. Once you stop working or at your full retirement age, Social Security will recalculate your benefits to include those you temporarily lost but over your projected lifetime (you don’t get a lump sum).

Read Social Security Announces 8.7% Benefit Increase for 2023.

About the author: Alyson Dorosky, CSSCS

Alyson Dorosky, CSSCS, is head of Social Security Support for LifeYield. She has seen thousands of different Social Security scenarios in five years of working with advisors and their clients to customize filing strategies and maximize retirement income.

And here's the official press release from the Social Security Administration about the cost-of-living adjustment:

Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans will increase 8.7% in 2023, the Social Security Administration announced today. On average, Social Security benefits will increase by more than $140 per month starting in January.

The 8.7% cost-of-living adjustment (COLA) will begin with benefits payable to more than 65 million Social Security beneficiaries in January 2023. Increased payments to more than 7 million SSI beneficiaries will begin on December 30, 2022. (Note: some people receive both Social Security and SSI benefits). The Social Security Act ties the annual COLA to the increase in the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statistics.

“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,” Acting Commissioner Kilolo Kijakazi said.

To view a COLA message from Acting Commissioner Kijakazi, please visit

Some other adjustments that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $160,200 from $147,000.

Social Security and SSI beneficiaries are normally notified by mail starting in early December about their new benefit amount. The fastest way to find out their new benefit amount is to access their personal my Social Security account to view the COLA notice online. It’s secure, easy, and people find out before the mail arrives. People can also opt to receive a text or email alert when there is a new message from Social Security--such as their COLA notice--waiting for them, rather than receiving a letter in the mail. People may create or access their my Social Security account online at

Information about Medicare changes for 2023 is available at For Social Security beneficiaries enrolled in Medicare, their new higher 2023 benefit amount will be available in December through the mailed COLA notice and my Social Security's Message Center.

The Social Security Act provides for how the COLA is calculated. To read more, please visit

Here is a fact sheet showing the effect of the various automatic adjustments.