The majority of elderly people within the United States have been relying on their Social Security as they consider it as their bread and butter. Suppose the data from the Social Security Administration is anything to go by. In that case, almost nine out of 10 individuals at the age of 65 and above are getting benefits from the program as this represents 33 percent of this age group’s income. The question is, is this sufficient?
Not yet prepared
In a recent report from Vanguard, it was noted that most Americans are not yet ready for their retirement years. Also, it was learned that the account balance in a typical retirement was a bit over $106,000. However, it was highlighted that over half – which translates to 58 percent of it – had savings amounting to less than $40,000, while a third of these retirees had only saved up less than $10,000, GBR writes.
Heads up from Social Security
On the other hand, the Social Security Administration usually rolls out updates regularly about the estimated future benefits. Unfortunately, the administration is no longer sending out such updates, though it’s still very much accessible to the people provided that they make a login with the program. Folks can register to allow people who have worked sufficiently to receive the monthly benefit. Moreover, Social Security’s website will also show what the individual’s monthly payment depends on that person’s earning history. Further, the acquired amount relies on the 35 years where that person had earned the most.
Additionally, this will also reveal how much less an individual would be getting in the event that they decided to withdraw early at 62 instead of waiting for the topmost amount by the time they reach the age of 70. Americans can also check the benefits they would be getting by claiming the Social Security benefits under their spouse, former spouse, or deceased spouse. In line with this, if the former spouse is getting more benefits, one can get also get more benefits on their record.
An ex-spouse could be getting more
The Social Security Administration suggests that one’s former spouse can get benefits depending on their record provided that their marriage lasted for at least a decade, the former spouse has not yet remarried, the former spouse has reached the age of 62 or above, the benefit that the former spouse is eligible to get depending on their work is lower compared to what they would be getting on that individual’s work, and the person is qualified to either disability or Social Security retirement benefits.
A Simple Tip To Boost Social Security Benefits By $800
Inflation sure did inflict some heavy blows to benefits in Social Security, including the amount of coverage to its beneficiaries in the United States. Prices of commodities have surged significantly by six percent in the past year alone. Putting things into perspective, inflation stagnated to almost zero for the better part of the last ten years, and in less than a year, prices have skyrocketed in nearly each of the major categories. A good example is the grocery prices that went up by 12 percent in several categories.
COLA 2022’s 5.9% may not be enough for some
To ease things up, the cost-of-living adjustment (COLA) for 2022 will be up by 5.9 percent, which is the largest tweak in the last four decades. Albeit such an increase, some still need additional funds to make ends meet. That said, here are some tips to substantially boost one’s income.
All about timing
An essential factor in determining a person’s Social Security benefit is timing. That said, the timeliest one can get in filing for the program’s benefits is by the time that individual has reached the age of 62, with age 70 being the latest. Americans are well-aware, though, that there’s a catch to this. Early filing of it would only yield lesser benefits. However, waiting for the ripe age of 70 would result in them receiving the maximum benefits, GBR writes.
Further, delayed retirement credits are some sort of reward that Social Security provides its recipients with for putting off claiming an individual’s retirement benefit. These credits start to stack up the month a person reaches their retirement age of 66 years and four months for people born in 1956, as this slowly increases to 67 for folks born in 1960 and above.
Additionally, these credits accumulate through age 69, though this may seem to work in reverse if one decides to get the benefits earlier.
The Social Security Administration stated that if a worker starts getting benefits prior to his/her full retirement age, that worker is said to be getting a reduction in benefits. The program stated that a worker can opt to retire as early as 62, though doing such may ensue a benefit reduction to as much as 30 percent.
Social Security Changes In 2022 That Are Likely To Affect Its Beneficiaries
Social Security has been around for quite a while now as it gives both disabled and elderly Americans a helping hand financially. It’s worth noting, however, that the program has undergone several changes over the decades, and here are some of the updates that are scheduled to go live come 2022.
An increased wage cap
One of these changes is an increased wage cap for Social Security tax purposes. Workers are not paying the Social Security taxes on the entirety of their earnings. There’s a wage cap being set up annually as this decides how much income will be applied with taxes, according to The Motley Fool.
Earnings reaching up to $142,800 are being subject to the program’s taxes in the current year. In 2022, the wage cap will be upped to $147,000. Meanwhile, folks who are earning less will not be affected by such change, though individuals who are earning otherwise could be losing more of their income to Social Security.
An increased earnings test limit
It’s likely to accrue Social Security while at the same time holding down a job. If an individual does such before reaching their full retirement age, that person will be required to abide by the earnings test limit if they want to dodge having a part of their benefits being withheld.
Additionally, the limit is updated annually. Currently, people can earn up to $18,960 minus the worry of their benefits getting impacted. By next year, the limit is scheduled to increase up to $19,560.
It needs to be pointed out that the earnings test limit will differ for people who are about to reach their full retirement ages. If one is about to reach the FRA this year, the person can earn up to $50,520 with their benefits in one piece. By 2022, it will be increased to $51,960.
Changes on earnings threshold to earn work credits
For one to be eligible for the program’s benefits a person needs to accrue 40 work credits in their lifetime at four credits max annually. Further, the work credit’s value can get altered from one year to the next. As of late, $1,470 is the equivalent of single work credit as this will be increased to $1,510 by 2022.
Such tweaks won’t affect workers provided that they are working full-time. The same thing goes for those who are earning the minimum federal wage. Otherwise, one may need to do some adjustments to their working hours to make sure that they’re earning the work credits they desire.
COLA’s 5.9 percent increase
Of course, this won’t be complete without mentioning Social Security’s yearly cost-of-living adjustments. In previous years, however, such tweak has been deemed as stingy by many since it’s bound to inflation data.
In 2021, inflation is very much felt by a lot of Americans as this prompted Social Security to apply a substantial boost on it. That said, in 2022, beneficiaries of the program are bound to get a 5.9 percent hike on their benefits – the highest one so far in forty years.
Easing Up Inflation Through SNAP, Social Security, And Wage Hikes
Americans are as of late utilizing all the financial help they can get, especially since it is expected that inflation in the United States will continue to surge in 2022. Luckily, some will be getting a much-needed oomph in their income to at least facilitate coping with skyrocketing prices of essential commodities and even health care.
One way of getting more money next year is through food stamps. This program decides the number of benefits of the Supplemental Nutrition Assistance Program (SNAP), according to GBR. Americans who are eligible for it received a hike back in October when the new fiscal year of the federal government kicked off. It was learned that the typical monthly benefit for the 2022 fiscal year surged to $251 for each individual from the usual $240 per person. The said growth can be pinpointed to the permanent update to the Department of Agriculture’s “Thrifty Food Plan.”
Another form is via wage hikes. Albeit the fact that the federal minimum wage may well seem to be wedged at $7.25 an hour for over ten years now, there are places in the U.S. that took it upon themselves and set their hikes in employees’ wages. This year alone, there’s a sum of 74 counties, cities, and states that increased their minimum wages, according to the National Employment Law Project. The project is said to be calculating the statistics for next year, though it is anticipated that the figures will remain the same.
A good example is the state of Arizona. The minimum wage on the part of the U.S. will be upped to $12.80 per hour from the current $12.15. The same thing goes with Colorado, where the minimum wage is set to increase to $12.56 an hour next year from $12.32.
As for the federal contractors, they too will be getting a raise as they will be increased to $15 per hour in 2022 after President Joe Biden signed a related executive order. This will fully affect whether new contracts are signed or specific actions like renewals or extensions.
Also, notable employers have either raised or will raise the minimum wages of their employees. There are even instances that these wage hikes have doubled workers’ pay.
Those who are receiving Social Security are set to receive their biggest cost-of-living adjustment (COLA) in 2022, as this has been deemed the highest in decades. This is when the monthly payments will increase by 5.9 percent to account for inflation. Further, next year’s average monthly Social Security benefit will be increased to $1,657 from the current $1,565 and $3,000 for couples.
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