20 Dec 3 Critical Changes to Social Security in 2022
Social Security planning is critical to your financial future.
Whether you’re already collecting benefits or nearing your full retirement date and planning to take them soon, understanding the changes to Social Security may help you better maximize your benefits.
Keep reading for 3 critical changes to Social Security in 2022.
#1 Larger Social Security Checks
The Social Security Administration announced a Cost-of-Living Adjustment (COLA) that will increase benefits by 5.9% in 2022 for retired workers. This is the highest increase since 1982.
The average monthly payment is expected to go up by $92 per month for individuals.
Married couples where both spouses receive benefits could see an additional $154 per month.
The catch is that part of your cost-of-living adjustment could be used to pay for Medicare premiums.
According to the Social Security Administration, SSI recipients will receive their first increase December 30, 2021. Regular Social Security recipients will receive their first increase in January 2022.
Download and Print the 2022 Social Security Changes Fact Sheet.
#2 Ability to Earn More If Collecting Early Benefits
If you’re younger than full retirement age and you’re working while collecting Social Security benefits, there are some limitations on how much you can actually earn without being penalized by the Social Security Administration.
The good news is that those collecting early benefits who are working will be able to earn up to $600 more in 2022 before their benefits are temporarily withheld.
If you are younger than full retirement age, you can earn up to $19,560 in 2022 before $1 dollar is withheld for every $2 earned above the limit.
So, for example, if you make $10,000 over that $19,560 limit, the Social Security Administration will take back $5,000.
In the year you turn your full retirement age, Social Security earnings limit climbs to $51,960, up $1,440 from 2021. If you go over the limit, the penalty is $1 withheld for every $3 in excess earnings.
If you’ve passed full retirement age and are still working, the money is yours to keep. There are no income limits or withholding limits.
#3 Increase in Social Security Taxes for Higher Earners
While most workers pay Social Security tax on earnings, some do not pay tax for earnings above the wage base limit.
The wage base limit is the maximum income subject to Social Security tax each year.
In 2022, the wage base is going up from $142,800 in 2021 to $147,000.
With the Social Security tax at 7.65 percent, you could pay as much as $321.30 in extra taxes. That amount may double if you are self-employed.