Social Security Administration plans benefit changes for 2022
(Watch this story Monday morning on WZZM TV 13) In 2021, Americans experienced the highest spike in inflation in three decades, as measured by the Consumer Price Index. According to the United States Bureau of Labor Statistics, the headline inflation index rose 6.8% for the 12 months ending November 2021, showing the largest 12-month increase since the period ending in June 1982.
Noting these drastic changes in inflation and in anticipation of what 2022 would bring, the Social Security Administration released a cost of living adjustment (COLA) in October that will affect more than 70 million Americans. Social Security and Supplementary Security Income (SSI) benefits will increase by 5.9% from January 2022, with benefits payable to more than 64 million Social Security beneficiaries. In addition, around 8 million SSI beneficiaries will see their payments increase from December 30, 2021, to cope with the sharp rise in inflation.
Other changes include an increase in the imposed wage limit in 2022, an increase in the earnings limit for workers below the “full” retirement age, as well as the first extension of the age. full pension since the changes were last adopted in 1983.
Lisa Hojnacki, Participant Services Coordinator / Team Leader for Greenleaf Trust’s Pension Services Division, said the monthly increase in SSI benefits is due to short-term inflation resulting from the pandemic.
âAs costs have increased, Social Security benefits are also increasing, (and) retirees are expected to see about $ 92 more per month (compared to 2021). So that’s a big increase, but the reality is that the cost of commodity inflation and also Medicare Part B premiums are likely to absorb a lot of that increase in benefits, âshe said. .
While Social Security beneficiaries might initially be excited about the increase, Hojnacki suggests caution, noting that the cost of goods and services, including insurance premiums, is also on the rise for the elderly or in the retirement age.
âSo as their monthly Social Security benefits go up, so do their insurance premiums. In addition to the increase in health insurance premiums, the same goes for ordinary products, products like meat, gas and home heating,â¦ fruits and vegetables and things like that. These increased benefits likely won’t necessarily lead to a more comfortable lifestyle for older people, just to likely maintain the lifestyle they do.
Hojnacki said the changes to Social Security benefits for the coming year are large and abnormal, noting a combination of the pandemic and the growing wealth gap in the United States as the main drivers.
According to a Social Security press release, further annual adjustments that take effect each January are based on average pay increases. As a result of the 2021 increase, the maximum amount of income subject to Social Security tax, or the maximum taxable, will increase from $ 142,800 to $ 147,000.
“So that means those who earn higher income will pay Social Security taxes on $ 4,200 more than in 2021,” she said.
The Social Security Administration will also increase the income limit for workers under the “full” retirement age from $ 18,960 to $ 19,560, with a deduction of $ 1 on benefits for every $ 2 earned at. over $ 19,560. The full retirement age is between 66 and 67, depending on the person’s year of birth.
Likewise, the income limit for those reaching full retirement age in 2022 will also drop from $ 50,520 to $ 51,960, as the SSA will deduct $ 1 from benefits for every $ 3 earned over $ 51,960. until the month in which the worker reaches full retirement age. For workers who have reached full retirement age or above throughout the year, there is no income limit.
Hojnacki said the fourth major change on the administrative side of social security includes a move to “full retirement age,” the first of its kind in nearly four decades.
According to ssa.gov, the Normal Retirement Age (ANR) is the age at which retirement benefits (before rounding) equal the âPrimary Insurance Amountâ or PIA. The website explains PIA as the benefit a person would receive if they chose to start receiving retirement benefits at their normal retirement age, at which point the benefit is neither reduced for early retirement nor increased for delayed retirement. . The specific and individual retirement age can be calculated on the SSA website.
âThe full retirement age is changing and it’s being extended, so the full retirement age is going to increase, that’s something people need to watch out for. And right now, for most Americans it’s age 66 and it’s moving back a bit, so for those who turn 66 in 2022, their full retirement age is pushed back by two. months, potentially, depending on when it falls for them. “
Hojnacki said the full retirement age until 2022 was 66 and two months, with the age being pushed back to 66 and four months in the coming year and ultimately delaying benefits by a few months. of certain incoming beneficiaries.
âAgain, you just have to keep an eye out for when you can start to reap the full benefits,â she said.
Beyond 2022, lawmakers have started exploring avenues to address the projected exhaustion of social security benefits by 2038 through the recent proposal of Bill 5723.
“There are a lot of proposals in this bill that would affect social security and also try to narrow the pay gap,” she said.
As grantees seek to adjust to the changes coming in 2022, Hojnacki suggests using the Social Security Administration’s online resource set.
âThe Social Security Administration has some great online tools. So, be sure to create your profile online and pay attention to what they offer with their online tools as this will give people the best, most informed, and most personal experience they can have. .
Further information is available on ssa.gov.