Social Security has been established in 1935, yet the program is continually evolving each year. The large increase in benefits owing to the annual cost-of-living adjustment is one of the key storylines for 2022.
However, whether you’re already retired, nearing retirement, or just starting your working career, there are a few additional key changes to the program that you should be aware of for 2022. Here’s a quick rundown of what to expect from Social Security in 2022.
Social Security recipients will receive a large 5.9% boost in their annual benefits in 2022. Supplemental Security Income recipients are subject to the same increase.
That increase will be applied to over 64 million Social Security recipients’ January 2022 checks and for the rest of the year. Since the 11.2 percent hike in 1981, this will be the largest COLA in 40 years.
The disadvantage of any COLA is that it is a reaction to growing inflation, which means that Social Security recipients will face higher costs as their payouts climb.
Increase in the Wage Base of Social Security
Existing worker taxes finance the majority of Social Security payouts to retirees. Workers, on the other hand, are only taxed on a fraction of their earnings, referred to as the Social Security wage base.
The Social Security pay base, like the yearly COLA, is subject to annual revisions. The pay base for 2022 is $147,000, up considerably from $142,800 in 2021.
This means that workers only pay a 6.2 percent Old Age, Survivors, and Disability Insurance tax on the first $147,000 of their earnings. For Social Security purposes, earnings exceeding that are tax-free.
Changes to the Full Retirement Age
Any retiree can begin collecting Social Security payments at the age of 62. The full retirement age has varied over time, based on the recipient’s date of birth.
Those born in 1960 will be entitled to receive Social Security for the first time when they age 62 in 2022. For those born in 1960 or later, the full retirement age is 67, according to the Social Security Administration.
This is an increase from the full retirement age of 66 years and 10 months for those born in 1959 and eligible for Social Security for the first time in 2021.
After claiming benefits, the earnings limit has been raised
You can continue to work after filing for Social Security, but if your earnings exceed certain thresholds, your benefits will be temporarily cut. If a worker was still under full retirement age in 2021, payouts were lowered by $1 for every $2 earned above $18,960.
The cap will rise to $19,560 in 2022. Your earnings maximum increases to $51,960 in 2022 if you reach full retirement age, up from $50,520 in 2021. For every $3 over this limit, these workers’ benefits are decreased by $1.
- Can You Receive Social Security Disability Benefits for the Rest of Your Life?
- Some Social Security Checks May Be Lost for Retirees in These 12 States!
- Update on the Stimulus: Was It a Mistake to Distribute the Checks?
Social Security benefits are not reduced once you reach full retirement age, regardless of how much you earn. When workers approach retirement age, they are compensated for any benefit losses owing to excess earnings in the form of enhanced payments.
The maximum Social Security benefit is increasing
When you file for Social Security, the amount you earn is determined by a combination of your lifetime earnings record and the age at which you file for benefits. The higher your payout, the more you earn and the longer you wait to file.
The maximum Social Security payout for someone filing at full retirement age in 2022 is $3,345, up from $3,148 in 2021.
Where Can You Find Your Social Security Number?
Create a “my Social Security” account at SSA.gov to find your current Social Security information quickly and easily. A record of your lifetime earnings history and an estimate of your possible payouts at age 62, full retirement age, or age 70 are among the features available on the site.
If you’re over 60 and don’t have an online account, the Social Security Administration will send you a hardcopy statement three months before your birthday.