Inflation has taken a heavy toll on the U.S. economy this year. More than one-third of adults have dipped into their savings to cover living expenses, and the personal savings rate (savings as a percentage of disposable income) dropped to a 14-year low of 3% in June, according to the Bureau of Economic Analysis.

Inflation has made life especially difficult for retirees who depend on Social Security. Medicare Part B premiums jumped 14.5% in 2022, the fourth-largest increase in the last two decades, and prices across several other spending categories -- food, energy commodities (e.g., gas), and energy services (e.g., electricity) -- rose at a double-digit pace in August.

Based on that data, the 5.9% cost-of-living adjustment (COLA) applied to Social Security benefits in 2022 fell woefully short. Fortunately, three big changes in 2023 could help retirees on Social Security fight inflation.

1. Big cost-of-living adjustment (COLA)

Social Security COLAs protect the purchasing power of benefits by ensuring they keep up with rising prices. The math behind those COLAs is simple enough: Third-quarter inflation (July through September) from the current year is compared to third-quarter inflation from the previous year. The percent change becomes the COLA for the next year.

Well, inflation hit a 40-year high several times in 2022, meaning the COLA in 2023 is on pace to be the largest in the last four decades. In fact, Marc Goldwein of the Committee for a Responsible Federal Budget says retirees could see a 9% COLA next year, though the exact figure depends on the September inflation report slated for publication on Oct. 13, 2022.

What does that mean for beneficiaries? A 9% COLA would bump the average monthly benefit paid to retired workers to roughly $1,823 in 2023, an increase of $150 per month. Similarly, the average monthly benefit paid to spouses of retired workers would be roughly $908, an increase of $75 per month. That extra cash should help offset rising prices at grocery stores and gas stations.

2. Lower Medicare Part B premium

Social Security recipients age 65 and older are automatically enrolled in Medicare Part A (inpatient insurance) and Medicare Part B (outpatient insurance) unless you specifically opt out. Most beneficiaries receive Medicare Part A for free, provided they have paid Medicare taxes for at least 10 years. But Medicare Part B premiums are automatically deducted from Social Security benefits each month.

After a massive price hike in 2022, the standard Medicare Part B premium is projected to drop 3% to $164.90 in 2023, according to the Centers for Medicare and Medicaid Services (CMS). That is great news for retirees. It means a smaller portion of their Social Security check will be deducted to cover Medicare Part B premiums each month.

3. Higher retirement-earnings limit

Given the trajectory inflation has followed this year, some beneficiaries may have decided to remain in the workforce after claiming Social Security. That decision has no impact on benefits for seniors of full retirement age (FRA), but working individuals who claim Social Security before FRA will see a temporary reduction in benefits if their earnings exceed certain limits.

In 2022, the earnings limit is $19,560 for individuals under FRA for the entire year. If wages exceed that threshold, $1 in benefits will be deducted for every $2 in earnings over the limit. For example, an individual under FRA who earns $34,560 ($15,000 over the limit) this year will see their Social Security benefit reduced by $7,500.

Similarly, the earnings limit is $51,960 for individuals who reach FRA this year. If wages exceed that threshold, $1 in benefits will be deducted for every $3 in earnings over the limit. For example, an individual who earns $54,960 ($3,000 over the limit) before reaching FRA in December 2022 will see their Social Security benefit reduced by $1,000.

Fortunately, those limits tend to increase each year to account for changes in general wage levels. The exact figures will likely be announced in October, but the limits have increased by approximately 2.9% per year over the past decade. If that trend continues, the lower limit will reach $20,135 and the upper limit will reach $53,490. That extra cash could help working beneficiaries under FRA battle inflation next year.