Pamela Kweller RSSA Staff
The Social Security program was founded over 86 years ago and throughout its existence, there have been many changes to the program. Here are five important changes that will take effect beginning January 2022.
1. Social Security beneficiaries will receive more money each month.
There will be a 5.9% increase in benefits in 2022. This is the Cost of Living Adjustment commonly referred to as COLA. Beginning January 2022, more than 64 million Social Security beneficiaries will receive a 5.9% increase in their Social Security benefits.
The average monthly Social Security benefit for 2021 is $1,565. With a 5.9% increase, the average beneficiary will expect to receive approximately $100 more each month, making the average monthly Social Security benefit for 2022 $1,657.
2. The amount of earnings subject to the payroll tax has been increased.
Social Security is a pay-as-you-go program. Social Security recipients receive benefits from the workers who pay into the system through the payroll tax (FICA or SECA).
12.4% of income is subject to the Social Security payroll tax. Half is paid by the employee and half is paid by the employer. If a worker is self-employed, they must pay the full 12.4%. However, unlike the Medicare payroll tax, not all earnings are subject to the Social Security payroll tax.
In 2021, the maximum taxable earnings limit was $142,800. In 2022, the limit has increased to $147,000. Earnings that exceed $147,000 will not be subject to the Social Security payroll tax.
3. The Maximum Monthly Benefit has increased.
If someone filed for Social Security benefits at their Full Retirement Age (FRA) in 2021, the maximum monthly benefit possible to receive was $3,148. In 2022, that maximum monthly payout has been increased to $3,345. This means that in one year, an individual can earn up to $40,140 in Social Security income.
Plus, if someone waits to file past their FRA up until age 70, they can receive even more money each month and therefore, annually as well.
4. Workers need to earn more money to earn work “credits.”
In order to be eligible for Social Security benefits, you must have earned a minimum of 40 “credits” or “quarters of coverage”. The credit may only be earned from a job that pays Social Security payroll taxes. You cannot earn more than 4 credits in one year and therefore, you must work a minimum of 10 years in order to earn those 40 credits.
The amount of earnings required for one credit in 2021 was $1,470. In 2022 the amount has increased to $1,510. This means that you can earn the maximum 4 work credits in 2022 by earning a minimum of $6,040.
5. Disabled beneficiaries can earn more income and still receive benefits.
In order to receive benefits, disabled workers (those who qualify for Social Security disability benefits) can only continue to receive benefits if they earn less than a specific amount of income.
In 2021, non-blind disabled workers could only earn up to $1,310 each month before becoming ineligible to receive benefits. However, in 2022 non-blind disabled workers will be able to earn up to $1,350 each month. And blind disabled workers will be able earn up to $2,260 each month in 2022 compared to the $2,190 limit in 2021.
While these are five important changes coming to the program in 2022, these are not all of the changes. See more Social Security changes in 2022 here. Plus, be sure to keep your eyes and ears open for further changes to the program. The Social Security 2100 Act was recently reintroduced to the House of Representatives and there is a chance it will become law. Watch this video to discover the changes this bill would bring to the Social Security program.