Social Security Goes Big in 2023: Benefit Hike of 8.7% Brings More Relief to Seniors

The Social Security Administration has declared an 8.7% cost-of-living adjustment (COLA) for 2023, which will result in an average Social Security benefits increase of $140 per month starting in January 2023. The increase in guaranteed income, however, may lead to reduced benefits in other areas. The 2023 Social Security COLA is the largest increase since the 11.2% adjustment in 1981, as reported by CNBC on October 13, 2022.

At the same time, Medicare Part B premiums will decrease by 3% in 2023, the first drop in over a decade. This decrease is expected to result in an average monthly savings of $5 for seniors. According to Acting Commissioner Kilolo Kijakazi, seniors will have increased financial stability and relief with the decrease in Medicare premiums and increase in Social Security benefits in 2023.

Based on a report by Forbes on October 13, 2022, the Social Security cost-of-living adjustment is based on the consumer price index and results in an average monthly benefit increase of $146 to $1,827 for individuals and $238 to $2,972 for couples. The maximum benefit for a person at full retirement age will increase to $3,627 per month.

The government that provides Social Security benefits also taxes those benefits if an individual’s income is over a certain threshold. In 1983, Congress imposed federal income taxes on Social Security benefits. The tax on benefits ranges from 50% to 85% based on the individual/joint income, with higher income resulting in a higher tax on benefits, according to Forbes.