Major Changes in Social Security
There are significant changes in store for Social Security in 2022, and the news is good for once! We’ll explain what to expect in the new year.
Social Security COLA Increase
Those receiving Social Security benefits are getting a raise, a pretty substantial one. In October, the Social Security Administration announced that there would be a COLA (cost of living adjustment) starting in January 2022 of 5.9%. This increase was the largest since 1983 when it was 7.4%.
Last year’s COLA increase was just 1.3%. Over the past decade, it’s averaged 1.7%. Why the significant change next year? Inflation. The rate of inflation in 2020 was 1.4%. This year, it’s 6.2%. The ongoing economic recovery from the pandemic has sent the costs of goods and services up. What cost $1.00 in 2020 costs $1.06 this year. The COLA increase will help those receiving SS benefits preserve the buying power of their dollar.
The COLA increase will mean, on average, an additional $92 per month for a total of $1,657 per payment. Not bad, especially when compared to last year’s average increase of about $20 per payment. For those receiving SS benefits who are of Medicare age, keep in mind that your Medicare expenses are coming out of your benefit.
Social Security Statements
The other big change is the look of Social Security statements, which haven’t been reimagined for a long time. The old statements ran to four pages and mainly were long walls of text. The new statements are just two pages and primarily graphics. They’re much easier to read; you can find out what you need to know at a glance.
Anyone over age 18 who is a citizen can register for an account and look at their statements. It’s a good idea to make sure all information is correct, especially your earnings history. If this information isn’t accurate, it could negatively impact your benefits.
If you’re not yet receiving social security benefits, you can see an estimate of your future benefits when you take them early, at full retirement age, and after age 70. You can see the same for your spouse. If you need proof that you’re not receiving benefits, you can find it on your statement.
You can create an account here and see a PDF version of your statement. If you’re 60 or older, a paper statement is mailed to you three months before your birthday. I recommend everyone create an account so you can access your statement anytime you want. Since the information is sensitive and you probably won’t log in often, use a password keeper to keep track of your user name and password. If you want a sneak peek at what the new statements look like, you can find that here.
Listen to What The Wealth Episode #44: Major Changes in Social Security
Listen in as I discuss inflation and how it is affecting a lot of what’s going on in the economy and your Social Security. You’ll learn how COLA increases will look for you per month, what to look out for, and how to plan for increased COLA and increased costs elsewhere. I’ll also cover various things you need to do (whether you’re on Social Security or not) in order to be prepared and keep all your information up-to-date.
What You’ll Learn In Today’s Episode:
- The COLA changes and why they’re so significant.
- What the increase will look like per month.
- What is changing about your Social Security statements—and what you need to do.
- Specific things to check regarding your Social Security statements.
- How to access and check your Social Security statement and information.
Resources In Today’s Episode:
If you are interested in learning more about personal finance start here.