What every retirement saver needs to know about 2022
Social Security payment increases by 5.9%
Here’s something you haven’t seen in a long time: a major Social Security Cost of Living Adjustment (COLA). The 5.9% increase is the largest since 1982 and also applies to Supplemental Security Income (SSI) benefits.
The average retirement check will increase by $92, to $1,657 from January 2022. Supplemental Security Income checks will also be boosted. The maximum monthly SSI payment in 2022 will be $841 for an individual, up $47 from 2021, and $1,261 for a couple, up $70.
The COLA also applies to other parts of social security. The maximum Social Security retirement benefit for a worker at full retirement age will increase to $3,345 per month in 2022, from $3,148 in 2021. The full retirement age for people born in 1956 is 66 years and four months, and gradually increases to 67 for those born in 1960 or later.
If you apply for Social Security earlier and continue to work before reaching full retirement age, the Social Security Administration (SSA) will withhold $1 for every $2 you earn above $19,560. per year, compared to $18,960 in 2021. If you work the year you reach full retirement age, SSA withholds $1 for every $3 you earn, up to 51 USD 960, compared to USD 50,520 in 2021. After reaching full retirement age, you will no longer have any deductions from your check to work, and your benefit will be adjusted upwards to take into account the amount of money already withheld.
But Medicare Part B premiums are also rising
If you’re 65 or older and have already claimed Social Security, Medicare Part B premiums are deducted directly from your monthly check, and those premiums will rise sharply in 2022. Due to inflation (and because the 2021 increase was limited by Congress), Medicare Part B premiums jumped to $170.10 for 2022, an increase of $21.60 from $148.50 in 2021. A beneficiary who has a monthly benefit of $1,657.30 in 2022 would net a net benefit (after deducting $170.10 from 2022 Part B) of $1,487.20.
The same will apply to social security contributions.
Somebody has to pay social security, and if you work, it’s you and your employer. The payroll tax to fund the Social Security Old Age, Survivors and Disability Insurance (OASDI) program is set at 6.2% for employers and 6.2% for employees. The self-employed pay all the freight: 12.4%. The rate will not change in 2022.
What will change, however, is the maximum amount of income to which this tax applies. In 2022, you pay OASDI tax on income up to $147,000, up from $142,800 in 2021. Medicare’s Hospital Insurance (HI) program rate remains at 1.45% for employees and 1.45% for employers (2.9% for the self-employed). ). It applies to all income.
There’s a very, very good chance your estate won’t be taxed by Uncle Sam. million dollars in 2021. That’s double for couples. Keep in mind, however, that some states impose their own estate and estate taxes in addition to the federal estate tax.