As we begin 2022, there are some changes related to Social Security and Medicare that you need to know along with some insight into the future.
Here are some highlights of the most impactful changes Social Security filers will see in 2022 and beyond:
- If you’re already receiving Social Security benefits, you’ll receive a 5.9% COLA increase in your monthly Social Security benefit. This good growth will be somewhat offset by an increase in Part B premiums
- To earn a maximum of 4 credits in 2022, you need to earn $6,040 or $1,510 per quarter
- Maximum taxable salary base $147,000 . Is
- If you turn 62 in 2022, your full retirement age will be 67. will be
- If you turn 62 in 2022 and claim benefits, your monthly benefit will be reduced to 30% of your full retirement age benefit
- If you choose to work before you reach full retirement age, and you’re collecting benefits, the annual income limit is $19,560. The limit for the year you reach full retirement age is $51,960 in 2022. At full retirement age, this limit expires!
- The maximum windfall elimination provision (WEP) deduction for 2022 is $512
- If you’re signing up for Social Security in 2022, keep in mind that additional planning may be required if you have an HSA.
If you haven’t done so already, make your own “My Social Security Account” Feather ssa.gov, This allows you to review your earnings history and estimate your projected future profits. The closer you are to retirement, the more accurate the estimated benefit will be. If you do not do so and reach age 60, you will receive a benefit statement by mail annually.
Here are some highlights of the most impactful Medicare changes in 2022:
- Medicare Part B premiums rising from $21.60 to $170.10
- The annual deductible for all Medicare Part B beneficiaries is $233 in 2022, a $30 increase from the annual deduction of $203 in 2021
Since Social Security has some social elements in it, the higher your income, the more you pay for Medicare. This is called the “income-related monthly adjustment amount,” or IRMAA. The IRMAA adjustment, which is recalculated annually, affects Medicare Part B and D, and is based on income from your income tax return from two years ago. The 2022 adjustment is based on your 2020 income tax return. The applicable limit for IRMAA for 2022 is $91,000 for single individuals and $182,000 for married couples. This calculation is called “modified adjusted gross income,” which is Medicare specific. If you have a “life-changing event” as defined by the Social Security Administration, you can appeal an IRMAA adjustment.
We’ve all read the stories about the viability of Social Security. Social Security won’t break, By law, Social Security can only pay what it collects and/or from existing reserves. Reserves that were created over many years because more people were contributing to Social Security than they collected are now being spent to pay current benefits. The reserve will expire by 2033-2034. In the absence of any reform, the current law mandates a 24% cut in benefits for all. Aging baby boomers, increased life expectancy and fewer people contributing to the system all contribute to Social Security’s woes. Most of the pundits say that Congress will take necessary reforms. We all have read for a long time that the Congress needs to do these reforms at the earliest. Since Social Security is the largest mandatory spending item for the federal government, you’d think this reform would take more precedent. The longer this rhetoric lasts, the more suspicious I am. For me, I plan on taking a 24% cut. If Congress fixes the problems, it’s on the cake, and I won’t be disappointed.
In addition to the reforms needed to increase Social Security for the foreseeable future, there is more discussion recently about changing or eliminating the Windfall Elimination Provision (WEP). This is not a new initiative; It’s getting more attention right now.
This article deals with the changes for 2022. While most people file at age 62, and the latest filing date is age 70, you have an 8-year deadline to file for Social Security benefits. A longer life expectancy usually translates into a longer retirement. There are good and bad reasons to file sooner or later. There are no rules of thumb for determining the best claiming strategy. You have only one opportunity to make the right decision for yourself and your spouse (if you have one). Social Security benefits typically replace about 40% of your pre-retirement income. Don’t base your filing date on emotion. If you have good cash flow and have a spouse, you may be affected by WEP or Government Pension Offset (GPO), you have good health and you can decide to work till your full retirement age, various claims Contact an expert to prepare the strategies for you to review. You may be pleasantly surprised to learn that the best strategy for you will increase your total lifetime benefits by up to $200,000.