Social Security benefits will increase in 2023

Social Security recipients are getting a boost after its Administration recently announced an 8.7 percent increase in benefits beginning in January 2023. This cost-of-living adjustment is one of the largest increases for the program since 1981, when benefits increased by 11.2 percent.
The change impacts nearly 70 million Americans receiving Social Security and Supplemental Security Income (SSI). According to the Administration, on average, Social Security benefits will increase by more than $140 per month starting in January.
The 8.7 percent 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.
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 www.ssa.gov/myaccount.
The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $160,200. The earnings limit for workers who are younger than “full” retirement age will increase to $21,240. The Social Security Administration deducts $1 from benefits for each $2 earned over $21,240.
The earnings limit for people reaching their “full” retirement age in 2023 will increase to $56,520. The Administration deducts $1 from benefits for each $3 earned over $56,520 until the month the worker turns “full” retirement age. There is no limit on earnings for workers who are “full” retirement age or older for the entire year.
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History of Automatic Cost-Of-Living Adjustments (COLA)
The purpose of the COLA is to ensure that the purchasing power of Social Security and Supplemental Security Income (SSI) benefits is not eroded by inflation. It is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the last year a COLA was determined to the third quarter of the current year. If there is no increase, there can be no COLA.
The CPI-W is determined by the Bureau of Labor Statistics in the Department of Labor. By law, it is the official measure used by the Social Security Administration to calculate COLAs.
Congress enacted the COLA provision as part of the 1972 Social Security Amendments, and automatic annual COLAs began in 1975. Before that, benefits were increased only when Congress enacted special legislation.
Beginning in 1975, Social Security started automatic annual cost-of-living allowances. The change was enacted by legislation that ties COLAs to the annual increase in the Consumer Price Index (CPI-W).
The change means that inflation no longer drains value from Social Security benefits.
The 1975-82 COLAs were effective with Social Security benefits payable for June (received by beneficiaries in July) in each of those years. After 1982, COLAs have been effective with benefits payable for December (received by beneficiaries in January).
Automatic Cost-Of-Living Adjustments received since 1975
July 1975 — 8.0%
July 1976 — 6.4%
July 1977 — 5.9%
July 1978 — 6.5%
July 1979 — 9.9%
July 1980 — 14.3%
July 1981 — 11.2%
July 1982 — 7.4%
January 1984 — 3.5%
January 1985 — 3.5%
January 1986 — 3.1%
January 1987 — 1.3%
January 1988 — 4.2%
January 1989 — 4.0%
January 1990 — 4.7%
January 1991 — 5.4%
January 1992 — 3.7%
January 1993 — 3.0%
January 1994 — 2.6%
January 1995 — 2.8%
January 1996 — 2.6%
January 1997 — 2.9%
January 1998 — 2.1%
January 1999 — 1.3%
January 2000 — 2.5% (1)
January 2001 — 3.5%
January 2002 — 2.6%
January 2003 — 1.4%
January 2004 — 2.1%
January 2005 — 2.7%
January 2006 — 4.1%
January 2007 — 3.3%
January 2008 — 2.3%
January 2009 — 5.8%
January 2010 — 0.0%
January 2011 — 0.0%
January 2012 — 3.6%
January 2013 — 1.7%
January 2014 — 1.5%
January 2015 — 1.7%
January 2016 — 0.0%
January 2017 — 0.3%
January 2018 — 2.0%
January 2019 — 2.8%
January 2020 — 1.6%
January 2021 — 1.3%
January 2022 — 5.9%
January 2023 — 8.7%
(1) The COLA for December 1999 was originally determined as 2.4 percent based on CPIs published by the Bureau of Labor Statistics. Pursuant to Public Law 106-554, however, this COLA is effectively now 2.5 percent.