Although Social Security has existed for many years, it undergoes changes from time to time. Some big changes are coming to Social Security in 2022. Listed below are a few things you need to know, regardless of when you expect to collect benefits now or in the future.
The Social Security Tax Will Cause Workers To Lose More Money
Workers pay taxes on their earnings based on a wage cap every year. A wage cap increase from $142,800 to $147,000 will take place in 2022. Those who earn less than $142,800 won’t be affected, but those earning more than $142,800 will have to pay more in taxes.
To Earn Work Credits Will Require You Possessing Higher Earnings
In order to receive Social Security benefits, you must accumulate 40 work credits over the course of your career. A maximum of four work credits can be earned per year based on earnings.
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By 2022, a work credit will be valued at $1,510 instead of $1,470. In other words, you would need to earn $6,040 to amass four work credits next year. Part-time workers may be affected by this, but full-time workers will not be affected.
Benefits Are Getting A Major Boost
The next cost-of-living adjustment (COLA) — on social security — will be the biggest raise seniors have received in decades. There is an increase of 5.9% in benefits, and while the rise in Medicare Part B premiums will probably offset part of that increase, seniors should still receive a greater amount than they’ve ever had before.
The rise in the cost of living this year is the main reason why the benefits will be so high in 2022. Despite a bigger paycheck, retirees will also have to deal with increasing food costs and other rising expenses.
The Limits On Earnings Test Have Been Raised
Working and collecting benefits at the same time is made possible with the Social Security Administration. By working and collecting benefits are not affected by how much money is earned after reaching Full Retirement Age (FRA). However, if you are still working and intend to collect Social Security, it is important to keep the earnings-test limits in mind.
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You will not lose benefits if you earn more than $19,560 next year. You will, however, be withheld $1 for every $2 you earn once you earn over that limit. By the time you reach FRA in 2022, your earnings will increase to $51,960 without affecting your benefits. Additionally, $1 will be deducted from your earnings per $3 in earnings for Social Security.
Benefits withheld from you as a result of exceeding your income-test limits aren’t completely lost. As soon as you reach FRA, they are added back to your monthly payments. It is important to remember, however, that those payments are permanently reduced for every month that you claim benefits before FRA. Consider holding off on filing your Social Security application if you expect to earn enough to have benefits withheld.
Follow Social Security Updates Closely
Regardless of when you plan to enroll in Social Security or not, any adjustments may affect your finances, such as a raise in the maximum wage. It pays to stay informed about Social Security as the program evolves so you won’t be caught unprepared financially. To read more and the latest news like this stay tuned with The East County Gazette.