Social Security & VA Disability Benefits to Increase 8.7% in 2023
Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans will increase 8.7 percent in 2023.
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. (Note: some people receive both Social Security and SSI benefits.)
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 (see Full Retirement Age Chart) will increase to $21,240.
The earnings limit for people reaching their “full” retirement age in 2023 will increase to $56,520.
There is no limit on earnings for workers who are "full" retirement age or older for the entire year.
VA Disability Pay Rates Increase 8.7%
2023 VA disability pay rates, which are effective December 1, 2022, have a year over year increase of 8.7% based on the latest cost-of-living adjustment (COLA). Confirmed as of October 13, 2022, this rate increase is the highest rate increase we've seen in about 40 years.
Medicare Information
Information about Medicare changes for 2023 is available at www.medicare.gov. For Social Security beneficiaries receiving Medicare, their new higher 2023 benefit amount will be available in December through the mailed COLA notice and my Social Security's Message Center.
It's worth noting that Medicare premiums will decrease by $5 in 2023. This is the first time in a decade that we've seen a premium decrease.
COLA Notices
In December 2022, Social Security COLA notices will be available online to most beneficiaries in the Message Center of their My Social Security account.
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.
