Social security has existed since 1935, but there are still changes in the program every year. One of the biggest headlines in 2022 is the big jump in payouts due to the annual adjustment of cost of living. But there are a number of other significant changes to the program that you should be aware of for 2022, whether you are already retired, approaching retirement, or have just begun your working career. Here is a short list of the major changes you can expect Social Security for 2022.
Adjustment of cost of living
For 2022, social security beneficiaries will earn a significant increase of 5.9% in the volume of their annual payments. The same increase applies to those who earn Supplementary Security Income Payments. More than 64 million social security recipients will see this increase applied to their checks from January 2022 and the rest of the year. This will be the largest COLA in 40 years since the increase of 11.2% in 1981. The disadvantage of any COLA is, of course, that it is a response to rising inflation, which means that social security beneficiaries will have to face higher costs with their increased payments. .
Increasing the wage base for social security
Social security payments to pensioners are financed primarily by taxes on existing workers. But workers are only taxed on a portion of their wages, known as the social security wage base. Like the annual COLA, the salary basis for social security is subject to annual changes. For 2022, the salary base is $ 147,000, a significant increase from 2021’s $ 142,800. This means that workers only pay old-age, survivors’ and disability insurance taxes on 6.2% of the first $ 147,000 of their wages. Earnings above that are tax-free for social security purposes.
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Adjustment in full retirement age
The earliest pensioner can claim their social security benefits is 62 years of age. Full retirement age has varied over the years, depending on the recipient’s date of birth. From 2022, those born in 1960 can claim social security for the first time if they wish when they turn 62. According to the Social Security Administration, full retirement age will be 67 for those born in 1960 or later. This is an increase from the full retirement age of 66 years and 10 months for those born in 1959 who could only claim social security in 2021.
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The earnings limit is increased after claiming benefits
You can continue to work after claiming your social benefits, but if you earn above certain limits, your payout will be temporarily reduced. For 2021, benefits were reduced by $ 1 for every $ 2 a worker earned over $ 18,960 if they were still under full retirement age. By 2022, that limit will rise to $ 19,560. If you reach full retirement age in 2022, your earnings limit will jump to $ 51,960, up from $ 50,520 in 2021. Benefits for these workers will be reduced by $ 1 for every $ 3 above this limit. When you reach full retirement age, there are no reductions in your social benefits, no matter how much you earn. Workers are made whole for any benefit reductions due to excess income when they reach retirement age in the form of increased payments.
Maximum social security payment increases
The amount you earn when you claim social security is based on a combination of your lifelong earnings and the age at which you apply for benefits. The more you earn, and the later you wait to submit, the higher your payout will be. For 2022, the maximum possible social security payment for a recipient who submits at full retirement age is $ 3,345, up from $ 3,148 in 2021.
Where can you find your information on social security
The easiest and best way to find your current social security information is to create a “my social security” account at SSA.gov. Some of the information you can find on the site includes a record of your lifelong earnings history and an estimate of your potential payouts at age 62, your full retirement age or 70 years. If you are 60 years of age or older and do not have an online account, SSA will send you a physical statement three months before your birthday each year.
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