Here are the 3 big changes to Social Security taking effect in 2023 — some are overwhelmingly positive but others are a mixed bag

As millions of Americans no doubt marked Jan. 1, 2023 with resolutions for self-improvement for the year ahead, changes to the federal government’s main social welfare safety net are also taking effect this year.

The news is mostly good for those already receiving money from the program. Additional boosts will allow recipients to keep pace with inflation-fueled costs for food, gas and other everyday spending.

But for everyone still paying their dues? The changes may be a little less welcome. Here’s what they’ll mean for you — whether you’re decades into or decades away from retirement.

Don't miss

Cost of living adjustment: Let’s get a COLA

The most impactful change in 2023 is the 8.7% cost of living adjustment, or COLA, which takes effect this month. For instance, if you receive $2,000 a month from Social Security, the monthly payout will rise to $2,174 per month.

This year's COLA marks the highest percentage jump since 1981’s 11.2% rise, and is tied to the blistering inflationary pressures that have driven up daily costs for every American.

Wait the max, get the max

This year, the government plans to reward the patient Americans who hold off on claiming their benefits until they reach the full retirement age (FRA) of 67. On average, beneficiaries who didn’t wait until the FRA will see their checks increase by about $140 a month next year.

But those who hold off on claiming their benefits until 67 will see their monthly checks go up by $282 to $3,627 a month.

Read more: Here's how much the average American 60-year-old holds in retirement savings — how does your nest egg compare?

The Social Security Administration has tied its cost-of-living increases to the Consumer Price Index. So while the big COLA was inevitable, it’s welcome nonetheless.

But remember these increases likely won’t help beneficiaries recover the extra costs incurred in 2022. Inflation — while easing in recent weeks — remains high enough that the Federal Reserve still plans rate increases this year.

Higher earners will pay more

Now for the bit of mixed news (depending on your income bracket.) Because Social Security gets most of its money from payroll taxes, the program will dig deeper into the paychecks of high earners.

Before 2023, the maximum earnings subject to Social Security taxes was $147,000.

Beginning this year, employees who make more than $160,200 will have to pay taxes on an additional $13,200 of income.

Full retirement age stays the same

When it comes to Social Security, the system continues to reward patience. The full retirement age of 67 is staying the same this year.

And the max benefit changes happening on the older end of the beneficiary age spectrum only confirm the value in holding off until you absolutely need Social Security. While seniors can tap their Social Security benefits at 62, delaying will gain you increasingly more money per month.

Simply waiting to claim until 67 can earn you a delayed retirement credit of up to 8% of your yearly benefits on top of the maximum benefit amount.

Keep in mind it also pays to investigate spousal and survivor options, including current married couples taking the lower earner’s benefits first, and delaying the benefits of the highest earner. The AARP Social Security Resource Center is a helpful resource for understanding Social Security timelines.

What to read next

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.