It’s widely known that many seniors depend on their Social Security benefits during retirement. These seniors usually use the benefit to cover their expenses when they retire. You may not see these Social Security changes as a challenge if you are not yet in this stage of life. It’s essential to remain updated about the Social Security benefits even if you won’t be retiring anytime soon. Below are three Social Security updates you need to be aware of in 2022. 1. Social Security Wage Cap Changes The main revenue source for Social Security is payroll taxes. The primary reason why benefits cuts are feasible is that the payroll taxes are expected to increase significantly in the next few years. This payroll tax increase is due to the massive exit of baby boomers from the workforce. You should note that not all income earnings are subject to Social Security taxes. You will pay taxes on your earnings if it exceeds the annual wage cap that determines the amount of payroll subject to tax. This wage cap will be $147,000 in 2022, and if you earn above this wage cap, you will pay Social Security taxes. Some lawmakers and advocacy groups are pushing to eliminate or increase this wage cap. Low-income earners pay more Social Security taxes, while higher-income earners pay taxes on a small portion of their earnings. Eliminating or increasing this wage cap will minimize benefit cuts and add more revenue to Social Security. 2. Work Credits Value Increased Nobody can guarantee Social Security because it is earned by being employed and paying appropriate Social Security taxes. You must earn at least 40 work credits during your entire working duration before qualifying for Social Security benefits. The maximum work credit you can earn annually is four credits, and work credit value changes yearly. In 2021, you must earn $1,470 to earn a work credit, but in 2022, you must earn $1,510 before earning one work credit. If you are a full-time worker or a minimum wage earner, earning the maximum annual credit should be easier. You should always evaluate your work credit value if you are a part-time worker. 3. Earnings or Income-Test Limits Increased Seniors can work while receiving Social Security benefits. Immediately you reach the full retirement age (FRA), your benefits payment will not be affected by your earnings. You must consider the earnings-test limit if you are a worker and have not reached the FRA. The earnings-test limit in 2022 is $19,560. Therefore, you can earn a maximum income of $19,560, and your Social Security benefits will not be affected by this additional income. However, Social Security will withhold $1 for every additional $2 earnings above the limit if you earn above it. The earnings-test limit is different for senior workers reaching the full retirement age soon, and their earnings-test limit is $51,960 in 2022. Any senior earning above this limit will have $1 withdrawn for every extra $3 earnings above the limit. Know The Social Security Changes Regardless of your Social Security status, it’s crucial to know about the current Social Security changes. You will be amazed to know the effect of these changes.
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