The Social Security Administration (SSA) says it has good and bad news for consumers to start 2022. The agency announced that the full retirement age has been officially raised to 67 years. However, it also noted that this would be the last year a change in the retirement age would take place unless action is taken by Congress.
It might be something that does not hold its breath. The last time Congress changed the full retirement age was in 1983, a step that came on the heels of life expectancy rising and health improvements being made for older Americans.
The action is estimated to affect about 70 million Americans and is the largest change since 1982, when recipients saw a 7.4% increase in benefits.
Fines for early collection of benefits
The SSA never promised that there would be no math involved, but it is there.
Workers can now start collecting Social Security checks when they turn 62, but there is one punishment to start so early. The benefit is reduced by 5/9 of one percent (or 1/180) for each month before a recipient reaches full retirement age, up to three years. If consumers start raising benefits more than three years (or 36 months) before full retirement age, benefits are reduced by 5/12 by one percent (or 1/240) each month.
For example, if a person decided to charge social security at the age of 62, then the benefit would be reduced by 30% on a monthly basis to the primary recipient. If you put it in real numbers, a person who receives a pension benefit of $ 1,000 will have the total amount reduced by $ 300. A spouse benefit will also be reduced by 35%. If one spouse received $ 500 a month, they would receive $ 325 a month in the future.
To make things simpler, SSA has developed a benefit planner that includes a chart of retirement age. It is available here.
Social security recipients and new income tax deductions
With the tax season in full swing, SSA also wants recipients to be aware that there are some new special tax deductions that can go to expenses. The tax deductions are available even if someone receives Supplemental Security Income (SSI) but does not usually file a tax return.
The largest of these is the Child Tax Credit (CTC), which was expanded last year to help families raising children. The credit can be claimed by anyone who has a qualified child, even if they do not normally file a federal tax return. It can benefit the taxpayer up to $ 3,600 per. qualifying child under 6 years and up to $ 3,000 for each qualifying child aged 6 to 17 years. Full details of CTC are available here.
The Agency reminds social security beneficiaries that they may also be eligible for EITC (Earned Income Tax Credit). As of 2021, the amount of investment income that an American can receive and still be eligible for the EITC increased to $ 10,000. The only catch is that a person must qualify and file a federal tax return to claim the EITC. You can visit ChildTaxCredit.gov for options to file a federal tax return for free.