Late last year, the Social Security Administration announced a 5.9% increase for its beneficiaries. This increase, designed to help less fortunate Americans cope with today’s high inflation, is the largest in 40 years.
The change brought more money to more than 70 million American citizens. About 8 million people receiving Supplemental Security Income, or SSI, received their first increased benefit on December 30, 2021. The remaining (about 64 million) people on Social Security benefits began to benefit from the changes in January 2022.
Now let’s take a look at the key changes in Social Security expansion in 2022.
1. Benefits increase by 5.9%
Nearly 70 million Social Security beneficiaries will receive an increase in their monthly income. The adjustment, calculated on the basis of the CPI-W (Consumer Price Index for urban wage earners and white-collar workers), has been made to help beneficiaries cope with rapid inflation.
The 5.9% increase in 2022 is significantly more compared to previous years. In 2021, the cost of living (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 who depend on them may find it difficult to deal with emergencies. Luckily you can apply Borrow directly from Viva Paydays to deal with emergencies.
2. Maximum Taxable Income Increased to $147,000
In 2021, employees who earned up to $142,800 were required to pay a 6.2% Social Security tax. While employees who earned more than that amount were not required to pay the tax. However, in 2022, the income cap subject to this tax rose to $147,000.2 while rates were maintained at 6.2% for employed persons and 12.4% for self-employed.
The adjustments mean that as taxable income increases, the amount of income available to the SSA to determine Social Security increases. Initially, employees reaching retirement age could receive up to $3,148 per month in Social Security benefits. But in the 2022 reforms, benefits have grown to $3,345.2 (up from $197).
3. Retirement age continues to rise
The normal age for collecting retirement income from Social Security is 62 years. However, you can claim the benefits before you reach retirement age, but you will be permanently reducing your benefit.
Under the new directive, the retirement age to claim social security without penalty will be raised by two months to 67 years. For example, if you turn 62 in 2021, your retirement age will be 66 years and ten months. Unless the law changes, everyone born in 1960 or later will not retire until 67.4 years old.
In addition, if you delay taking Social Security past normal retirement age, you may be able to receive more than your full or typical benefit. For example, if you wait until age 70 to file your claim, you will receive an annual payout of up to 32% more than if you started receiving your payouts at full retirement age.
4. The benefits increased
If you earn unemployment benefits while you are working, a percentage or all of your benefits may be temporarily withheld based on the amount you earn. But these income ceilings were raised in 2022.
Before you reach retirement age in 2022, you will earn up to $19,560. But after that, $1 will be taken from your payment for every $2 over the limit. The 2022 annual limit is $18,960, which is $600 more than the 2021 limit ($18,960).
If you turn 65 in 2022, your income limit will increase from $50,520 to $51,960 per year, increasing by $1,440. If you earn more than the limit, your Social Security benefits are reduced by $1 for every $3 earned over the limit. This only applies to money earned before reaching full retirement age.
5. Income Boost for Social Security Beneficiaries
The Social Security Disability Insurance, or SSDI, is a benefit program where employees can get insurance for perks by paying Social Security taxes through paychecks. This program is aimed at people with disabilities who cannot work to earn a living. The 9.6 million people who receive SSDI benefits will see their benefits increase by 5.9% in 2022, which has made a huge difference.
Disabled workers now receive about $1,358 per 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 per month, an additional $133.
The changes in Social Security benefits have helped many people, especially as economies face high inflation rates. But this doesn’t mean Social Security beneficiaries should expect similar increases in the coming years.
The significant shift in 2022 may indicate that the government has no intention of increasing benefits in the near term. By the way, the last time we saw such an improvement was the 5.8% increase in 2009, after which it took two years before we saw an adjustment again.