The Social Security Administration noticed and did something about spiking inflation. There are a number of changes coming to a Social Security statement in 2022.
We will look at five major changes to Social Security that you should be aware of.
1. A cost of living adjustment.
The SSA announced that all beneficiaries will receive a 5.9% increase in their monthly benefit checks next year. This increase is designed to help retirees maintain their purchasing power. Even though you will receive more, your ability to purchase goods and services hasn't changed much from the year before.
2. The wage base for Social Security is increasing.
The SSA collects premiums for its Old Age, Survivor, and Disability Insurance (OASDI) program by taxing 6.2% of your wage base. The amount will rise to 147,000 in 2022. All wages up to 147,000 will be taxed at a rate of 6.2%, while all wages above that threshold will not be subject to Social Security tax. It's important to know why more of your income will be subject to taxation.
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3. The full retirement age is increasing to 67 for people who are 62 years old in 2022.
The age at which you can claim full retirement benefits is increasing to 67 in 2022, and this applies to anyone born in 1960 or later. If you turn 62 in 2022, you will be facing a full retirement age of 67, which is six months higher than those who were born between 1955 and 1959 It's not a huge difference to the individual if we're only talking about months of time, but it does have a measurable financial impact when applied to the burgeoning retiree population.
If you haven't reached full retirement age and won't until after 2022, you'll be able to earn up to $19,560 per month without any reduction in Social Security benefits. You were able to earn up to $18,960 without seeing a reduction in your monthly income.
If you reach full retirement age in 2022, you can earn up to $51,960 during the period in 2022, without seeing your Social Security checks docked.
If you wait until full retirement age to claim benefits, the SSA will never take away benefits based on work. If you're in the fortunate position to do so, waiting to claim benefits is another benefit.
5. Monthly premiums for Medicare Part B will increase.
The SSA's Medicare program will see cost increases in 2022. The Part B monthly premiums will increase by 14.5% in the year 2022.
Increased utilization and cost increases are the main reasons for this. This increase is the largest in Medicare's history and is a reflection of the times we live in.
You will pay more, but you will also get more.
The wage base is increasing along with the standardized FRA. This means you will pay more into the system. This is necessary for a number of reasons, but mainly to increase the amount available in reserve funds and account for our nationwide fight against inflation.
SSA is increasing benefit payments and making it possible for early claimers to earn more money in retirement without affecting monthly benefit checks Positive progress should be accepted and acknowledged with these changes.
Make sure to weave the changes into your budget, as they will affect you in 2022, be very clear on how they will affect you.
