Kiplinger Personal Finance: How the Rising Cost of Living Will Affect Social Security | Business News
If you receive Social Security benefits, you’ll get a big raise in 2022 — and high earners will owe more payroll taxes.
Social Security recipients will receive a 5.9% cost-of-living adjustment in Social Security benefits in 2022, the largest jump since 1982, when benefits rose 7.4%.
In 2021, the COLA was only 1.3%. The average monthly accrual will increase from $1,565 to $1,657 in 2022, or $92 a month. The average monthly payment for spouses receiving benefits will rise to $2,753 from $2,599.
But given the rising prices of everything from gas to restaurant meals, some seniors may find that wage increases won’t live up to increases in their cost of living — especially when health care costs are factored in.
Medicare Part B premiums, which cover physician visits and outpatient services, rose to $170.10 a month in 2022, up from $148.50 a year earlier, according to the Centers for Medicare and Medicaid Services.
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High-income earners who are subject to the Medicare Part B supplement will pay $238.10 to $578.30 per month in 2022, up from $207.90 to $504.90 in 2021.
The median premium for Medicare Part D, which covers prescription drugs, will be $33/month in 2022, compared to $31.47 in 2021.
There will also be higher thresholds for workers. The amount of earnings subject to Social Security payroll tax (6.2% for employees and 6.2% for employers) will increase by about 3%, to $147,000, from $142,800 in 2021.
Earnings in excess of the maximum salary of $147,000 are not subject to Social Security tax.
Social Security beneficiaries who have a side job or part-time job will be able to earn more before they take the earnings test.
If you claim benefits before you reach full retirement age — 66 for people born between 1943 and 1954 and gradually rise to 67 for those born later — Social Security will deduct $1 for every $2 you earn above $19,560 in 2022, up from 18, $960 the year before.
In the year you reach full retirement age, Social Security will deduct $1 for every $3 you earn over $51,960 in 2022, up from $50,520 in 2021. Once you reach full retirement age, the earnings test goes away.
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