2021 was a big year for Social Security changes, especially because of the pandemic and inflation.
While some of the changes were more visible this year, like the highest increase in COLA in recent history, there are actually adjustments every year.
Here are 4 major changes Social Security saw this year
First, there was an increase in Social Security wage base.
The funding for Social Security payments comes from taxing American’s wages.
6.2% of a person’s income goes toward Social Security and 1.45% goes toward Medicare.
Related: Here are five major Social Security changes happening next month, including a larger payment
Income over a certain amount stops being taxed with Social Security, meaning the portion past a certain threshold is not taxed.
In 2021 wages that surpassed $142,800 were no long taxed.
In 2022 that limit is increased to $147,000.
For 2022 an additional $4,200 in income will be taxed for high income earners.
Another change is that the fund for Social Security payments will run out sooner than expected because of the pandemic.
The original projection for the year that funding would run out was 2034, but that’s changed to 2033.
When funding “runs out” it does not mean people won’t get payments anymore. It will just slash what people get from a full, 100% payment, to 78% of the full amount.
Until that time comes, solutions are being explored, including raising the wage base for Social Security.
The COLA increase was one of the biggest and most talked about changes to Social Security in 2021.
In an attempt to keep up with inflation, which was recently announced to be over 6% for the last year, the COLA increase was 5.9%.
That’s the highest increase in almost 40 years. The last time it was this high was in 1982 at 7.4%.
The average increase beneficiaries can expect to see in their monthly payments is $92.
Finally, a major change is an increase in what seniors who still work can make before seeing their benefits decrease.
In 2021 the amount was $18,960.
For 2022 that amount will be $19,560.
Get the latest headlines delivered to your inbox each morning? Sign up for our Morning Edition to start your day. FL1 on the Go! Download the free FingerLakes1.com App for Android (All Android Devices) or iOS (iPhone, iPad).