3 social security changes to keep on your radar every year


Millions of older people depend on Social Security as their main source of income during retirement. And if you are still working, you may end up depending heavily on these benefits.

This is why it is important to keep an eye on Social Security. Although the program has been around for decades, it is also subject to certain changes each year, changes that could affect your retirement income or have other consequences. Here are three social security factors that you absolutely must follow.

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1. Adjustments to the cost of living

Seniors benefiting from social security are entitled to annual cost of living adjustments, or COLA, the aim of which is to give beneficiaries more purchasing power in the face of inflation. This year, Social Security recipients get a COLA of 5.9%, which is the biggest boost they’ve seen in decades. The reason for this generous COLA, however, is that the cost of consumer goods has increased dramatically since the summer.

Of course, in conjunction with COLAs, it’s also important to keep an eye out for increases in health insurance premiums, as these can weigh on increases in the elderly. In fact, this is precisely what is likely to happen in 2022. While Social Security benefits may increase, Medicare Part B is also going to cost a lot more, eroding that good boost otherwise.

2. The earnings test limit

The elderly are allowed to earn money from work and receive social security. But those who do so before reaching full retirement age (FRA) risk being denied part of their benefits if their income exceeds the earnings test limit.

In 2021, Social Security workers can earn up to $ 18,960 without affecting their benefits. In 2022, this earnings test limit rises to $ 19,560. Income beyond these thresholds entails the withholding of certain benefits.

It should be noted that the limits of the earnings tests are higher for those who achieve the FRA. In 2021, workers reaching FRA can earn up to $ 50,520 without affecting their benefits. In 2022, this limit will increase to $ 51,960.

3. The value of a works credit

Social security is not something seniors are automatically entitled to. Rather, eligibility depends on obtaining sufficient work credits, the value of which may change from year to year.

In 2021, a work loan is worth $ 1,470 in earnings. In 2022, a works credit will be worth $ 1,510 in earnings.

Workers can only collect up to four work credits in a single year, and they need 40 lifetime work credits to qualify for retirement benefits. And so for those who work very part-time, knowing the value of a work credit is essential.

Pay attention to changes in Social Security

You never know when Social Security changes may impact your financial situation, for better or for worse. Make sure to keep keeping up with Social Security news so you know what to expect and, if necessary, adjust your plans. You may, for example, decide to increase your hours in a part-time job to earn additional work credits in a given year. Or, you may decide to work fewer hours if you are on benefits and are about to exceed the income test limit.

Granted, there’s not much you can do as an individual when it comes to COLAs. But knowing what to expect in terms of income could help you better manage your spending in your senior years, so this is very important information to have.

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