Late last year, the social security administration announced an increase of 5.9% for its beneficiaries. This increment, which aims at helping less fortunate Americans cope with the current high inflation, is the most significant in 40 years.
The change created more money for over 70 million U.S. citizens. About 8 million people who get Supplemental Security Income, or SSI, received their first increased benefit on December 30 (2021). The remaining (roughly 64 million) individuals on the Social Security supplement started benefiting from the changes in January 2022.
Let’s now see the main changes in the 2022 social security expansion.
1. Benefits To Increase by 5.9%
Nearly 70 million Social Security beneficiaries will receive an increase in their monthly earnings. The adjustment, calculated on the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers), has been implemented to help the beneficiaries cope with the rapid inflation.
The 5.9% rise in 2022 is substantially more compared to previous years. In 2021, the Cost-of-Living Adjustment (COLA) increase was only 1.3%. In 2022, the average monthly pension for all retired employees increased by $92—from $1,565 to $1,657.2.
But these benefits come on regular dates, and people depending on them may find it tough to deal with emergency cases. Fortunately, you can apply for Instant loans at Viva Paydays to deal with emergencies.
2. Maximum Taxable Earnings Rose To $147,000
In 2021, employees earning up to $142,800 were required to pay a Social Security tax of 6.2%. While employees earning over that amount were not obligated to pay the tax. However, in 2022, the earning cap subjected to this tax rose to $147,000.2, while the rates were maintained at 6.2% for the employed and 12.4% for the self-employed.
The adjustments mean that as taxable income rises, the amount of earnings available to the SSA to determine social security increases. Initially, workers who attain retirement age could get up to $3,148 a month in Social Security benefits. But in the 2022 reforms, the benefits have grown to $3,345.2 (an increase of $197).
3. The Retirement Age Keeps Going Up
The regular age for collecting Social Security retirement income is 62 years. However, you can apply for the benefits before attaining the retirement age, although you’ll permanently reduce your benefits.
Under the new direction, the retirement age to start claiming Social Security without a penalty is set to rise by two months every year until it reaches 67. For example, if you turn 62 in 2021, your retirement age will be 66 years and ten months. Unless the legislation changes, everyone born in 1960 or after will not retire until 67.4 years old.
Furthermore, if you postpone taking Social Security past the regular retirement age, you may be able to collect more than your entire, or typical, benefit. For example, if you wait until age 70 to file your claim, you would receive an annual payout of up to 32% greater than if you began receiving your payouts at full retirement age.
4. The Benefits Increased
If you earn the Social Security benefit while working, a percentage or all of your benefits could be withheld temporarily, based on the amount you make. But these income caps have been increased in 2022.
Before you reach the retirement age in 2022, you’ll earn up to $19,560. But after that, $1 will be taken out of your payment for each $2 that goes over the limit. The annual limit for 2022 is $18,960, which is $600 more than the limit for 2021 ($18,960).
If you turn 65 in 2022, your income limit will rise from $50,520 to $51,960 a year, increasing by $1,440. If you earn more than the limit, your Social Security benefits will be reduced by $1 for every $3 earned over the limit. This only applies to money earned before reaching full retirement age.
5. Income Increase For Social Security Disability Beneficiaries
The Social Security Disability Insurance, or SSDI, is a benefit program where workers can get insurance for perks by giving Social Security taxes via paychecks. This program is meant for people living with disabilities who can’t work to sustain their livelihood. The 9.6 million people who get SSDI benefits will see a 5.9% increase in their benefits in 2022, which has made an enormous difference.
Disabled workers now get about $1,358 a month, up from $1,282 in 2021, a significant change. On the other hand, beneficiaries with a spouse and a child (or more) get about $2,383 a month, an extra $133.
Bottom Line
The changes in the Social Security benefits have come to the rescue of many people, especially now that economies are facing high inflation rates. But this does not imply that Social Security beneficiaries should expect similar increments in the coming years.
The significant shift in 2022 may signal that the government is not planning to increase the benefits anytime soon. Besides, the last time we witnessed such improvement was 2009’s 5.8% bump, after which it took two years before we saw another adjustment.