Here Are All the Big Ways Social Security Is Changing in 2022

Lawmakers have recently proposed changes to the Social Security benefits program. But as we move into an election year and partisan conflict remains, it’s unlikely any major legislation will pass in 2022 that modifies this popular entitlement program.

This doesn’t mean everything will stay the same, though. A huge number of Social Security changes happen automatically every single year. Here are seven of them.

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1. Full retirement age is changing

Full retirement age (FRA) is the age when you can get your standard retirement benefit. While it was once 65 for everyone, that hasn’t been the case for a long time. It’s been slowly moving back, and it will change again in 2022. For those turning 66 next year, FRA is moving to 66 and 4 months. That’s two months later than it was for people who turned 66 in 2022.

And for anyone who is turning 62 and first becoming eligible for Social Security checks next year, FRA is moving all the way to 67, up from 66 and 10 months for those who hit age 62 last year. This is currently the oldest FRA, so anyone born in 1960 or later will be subject to this later retirement age going forward.

2. The earnings required for a work credit are changing

Qualifying for Social Security requires you to earn a “work credit.” You can earn up to four per year.

There’s a certain minimum income you must earn to get one, though. That minimum income is going up, too. A work credit will cost $1,510 in 2022, up from $1,470 in 2021. To max out the work credits you can earn in 2022, you’ll need $6,400 in earnings or more, up from $5,880 in 2021.

You need a total of 40 work credits to be eligible for Social Security benefits on your work history. If you’re a part-time worker, be aware you’ll have to increase your earnings next year to work on amassing those 40 credits.

3. Recipients will receive a Cost of Living Adjustment

Retirees get raises in most years. They’re called Cost of Living Adjustments, and they’re necessary because otherwise, inflation would leave retirees with less buying power each year.

In 2022, seniors will be getting the largest Social Security raise in four decades. Benefits are going up a whopping 5.9%. This means a lot more monthly income.

4. Larger Medicare premiums will come out of Social Security checks for most retirees

While you may be getting a 5.9% raise, that doesn’t mean your check will be 5.9% bigger.

That’s because chances are good Medicare Part B premiums will be withdrawn from Social Security checks (they are, for most people). Premiums for Part B are increasing in 2022, jumping from $148.50 in 2021 to $170.10 for 2022. The extra $21.60 per month you must pay for Medicare will reduce the amount of your Social Security raise you get to take home.

5. The maximum income subject to Social Security tax is going up

Many people aren’t aware there’s a maximum taxable income subject to Social Security tax. Social Security taxes aren’t taken out of any income above that threshold, and income earned above it doesn’t factor in when a retiree’s benefit is set.

Because the maximum taxable income is pretty high, this rule change doesn’t affect most people — but high earners should be aware the amount they’ll be taxed on is going up. In 2021, wealthy people paid taxes on only $142,800 in income, but that number is going up to $147,000 in 2022. So, if you earn above $142,800, you could find yourself subject to a higher Social Security tax bill.

6. Seniors can earn more next year before benefits are affected

If you’re a working retiree, you end up forfeiting some of your benefits once your earnings cross a certain threshold. This rule applies only to seniors who have a job and have claimed benefits before full retirement age, though, as those who have hit FRA can work as much as they want.

For seniors under FRA, the good news is that they can make more money in 2022 before they see benefits impacted. Anyone hitting FRA at some point during the year can earn up to $51,960 before they begin losing $1 in benefits for each $3 earned above that threshold. This is up from $50,520 in 2021. And those who won’t reach FRA at any time during the year can earn $19,650 before they begin losing $1 for each excess $2 earned. This is up from a limit of $18,960 in 2021.

7. The exhaustion of the trust fund grows one year closer

Finally, the last big change to be aware of is that Social Security’s financial troubles are one year closer to coming to a head.

The Social Security trust fund is at risk of running dry by 2034 if lawmakers don’t act. When that happens, benefits can be paid only from revenue being collected. That’s enough to pay out most, but not all, promised benefits. If the worst occurs and the trust fund runs dry, Social Security recipients could see as much as a 22% benefits cut.

Since no changes were made to shore up Social Security in 2021, next year means lawmakers will be getting closer to the time they need to act to stave off disaster.

These changes could affect both current and future retirees, so knowing them all is important when making your plans for 2022.

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