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Explaining Why Your Next Social Security Check May Be Less Than You Anticipated!

If you’re retired and relying on Social Security, your first bank statement in 2022 may surprise you. Some newcomers to Social Security benefits may also be in for an unpleasant surprise. Their expectations may not have been met by the quantity they’ve seen thus far.

Why? When it came to Social Security benefits, it’s possible they were depending on some common regulations that didn’t work out in their favor.

This shouldn’t come as a shock to you. Let’s take a look at some of the so-called Social Security “rules” and see if they apply to your specific situation.

When your spouse files for Social Security, you will receive 50% of his or her benefit.

Yes, but it’s not quite like that. It’s possible that you won’t be eligible for the whole amount of spousal benefits, which is 50 percent of your share. This does not mean that merely having a husband or wife who has reached FRA does not suffice when filing for benefits.

The FRA for workers born in 1960 or later is 67 years old, therefore we’ll use it as our sample FRA. Your benefit will be reduced if you’re younger than your spouse (meaning you aren’t at full retirement age yet) and you plan to claim your spousal benefit at the same time.

Social Security spousal benefits are calculated by dividing your husband’s Social Security payment by the age of your spouse at the time of filing for your benefit. You’d have to wait until your own FRA before claiming the entire 50%.

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A spousal benefit of less than 50% can also come as a surprise in another way. For example, let’s say you and your wife are both 70 years old and plan to petition for Social Security benefits at the same time. You’ll file for the 50% spousal benefit, and she’ll file for her worker’s benefits.

Because she is 70 years old, she receives deferred credits for delaying her tax return past her Federal Retirement Age (FRA). You’re wrong. It doesn’t matter how much more money she’ll get, because you don’t get half of it. You’ll only get half of what she would have gotten at her FRA, though.

The total benefit you receive will be bigger in the long run, but you’ll lose out on three years of benefits if you don’t wait.

It is permissible to collect Social Security benefits even if you are actively seeking employment.

While this is true, there’s a lot of nuances to consider. Social Security retirement benefits and income are both available to those who have attained their FRA while still employed. Workers who file for benefits prior to their FRA are surprised.

Involuntary but partial deferment of benefits is imposed on these persons by the Social Security system. In general, if you make more than $19,560 in a year, the government will withhold $1 in benefits for every $2 in additional salary you receive.

If you attain FRA in that year, the rule becomes less onerous, but you should still be prepared for a drop in benefits. (For additional information on this, see our post on Social Security Earnings Tests.)

Many senior citizens have recently been surprised by this new rule. For example, if you lost your work as a result of the pandemic, but you hadn’t yet reached your FRA, you may still apply for Social Security.

Your Social Security benefits may drop until you achieve your FRA if you regain your employment this year. You’ll want to account for this drop in your budget even if the government doesn’t completely eliminate benefits.

A rise in the cost of living means that your Social Security benefit will increase as well.

This one is a sly swindle. With the 5.9 percent COLA increase from last year, your Social Security benefits have increased. However, this does not imply that you will receive a greater monthly deposit.

Why? Because the monthly Social Security benefits of most retirees cover their Medicare Parts B and D costs. People may be taken aback by this in two different ways. For the first time, Medicare premiums will rise in 2022, which means that more money will be pulled out of the general budget.

According to the Centers for Medicare & Medicaid Services, the usual monthly Part B premium for 2022 is $170.10, a 14.5 percent increase from 2021. Those who earn more than the so-called “income-related monthly adjustment amount” (also known as the “IRMAA”) will see an increase in their Medicare rates.

Consider this real-world example instead of going over all the guidelines. In 2022, a 68-year-old woman’s monthly Social Security check will drop from $1,248.50 to $1,179.20 due to a decrease in her benefit amount.

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Her husband’s business success in 2019 is to blame for the increase in their combined income. Your Medicare premiums are determined by your two-year-old’s modified adjusted gross income. Medicare premiums rise as a result of an increase in one’s income.

The IRMAA surcharge was imposed on her without her knowledge or consent. Increases in Medicare premiums wiped out her 5.9% Social Security COLA and actually decreased her monthly benefit by $69.30 in her case.

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