What Are the BIG Changes Happening by SSA in the Year 2022?
What are the BIG Changes Happening By SSA in the Year 2022? These changes could affect the Social Security program for many people. Whether you are approaching retirement or are currently working, you need to know what’s coming. Here are some essential things you need to know. You will receive a giant COLA and be able to keep more of your Social Security benefit and pay more into your retirement account.
COLA increase
The Social Security Administration will determine the COLA increase by comparing the third quarter of this year’s Consumer Price Index with the prior year’s third quarter. Although this increase is expected to be large, some experts think that the peak in inflation may be over before then. Former top economic adviser to President Barack Obama, economist Jason Furman, sees some hope in the rise of core CPI, the price of goods and services.
While the current consumer price index is still at 40-year highs, the rise in social security benefits will be less than half that figure. This increase is still far less than the beneficiaries’ costs in 2022. Besides this increase, beneficiaries will have to pay more for their Medicare benefits, which will eat up a significant chunk of their Social Security benefits. The Social Security Administration mailed notices to recipients last December. It also posted the notices online in the message center of my Social Security account.
Increase in full retirement age
The Social Security Administration (SSA) recently announced an increase in the full retirement age to 67 from 66. This is to maintain purchasing power for retirees. However, the increase won’t change the amount of money that retirees can spend, and early claimers should consider this progress. In addition, the increase will be applied in the same way as an increase in the wage base. If you’re thinking about retiring in 2022, know how these changes will affect you.
Increase in Substantial Gainful Activity
The Social Security Administration defines “substantial gainful activity” (SGA) as work that earns an individual more than a specified monthly amount. When determining whether an individual is engaging in SGA, the government assumes that the worker earns an amount higher than the average wage in their region. Each year, the threshold amount is based on the national average wage index. Non-blind individuals earn $1,310 per month, while blind people earn $2,190.
In addition to this, the maximum amount of earnings subject to Social Security payroll taxes will increase. Moreover, the retirement earnings test exemption amount will change. SSA will send courtesy notifications about the changes to your Social Security account. The new SSA policy will be effective in 2022. It will affect 70 million Americans. SSA will adjust your benefit rate if the cost-of-living increases. The cost-of-living index measures inflation. When inflationary costs rise, prices become more expensive. The SSA’s cost-of-living adjustment will help to offset these inflationary costs.
Increase in Social Security payroll tax
The increase in the Social Security payroll tax in 2022 will generate $1.0 trillion more in revenue over the next decade, covering 70 percent of the system’s 75-year funding gap. Currently, wages above $147,000 are not taxed. Hence, CEOs who earn $1 million per year would only contribute to the system through February 23, 2022. While the increase would increase the Social Security payroll tax by $2 percent, it would have a much smaller impact on workers.
The Social Security payroll tax rate is based on changes in the prices of a basket of goods and services. This is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers. As the cost of living increases, the price index will also rise. As a result, the COLA amount is expected to be significantly higher than the cost of living, which would reduce the benefits for retired persons.
