3 Social Security Changes to Keep On Your Radar Every Year

The Motley Fool
The Motley Fool
  • Though Social Security has been around for decades, the program can change from year to year.
  • It's important to stay apprised of updates whether you're still working or collecting benefits.

Millions of seniors rely on Social Security as a primary source of income during retirement. And if you're still working, you may end up depending heavily on those benefits down the line.

That's why it's important to keep tabs on Social Security. Though the program has been around for decades, it's also subject to certain changes every year -- changes that could affect your earnings during retirement or have other consequences. Here are three Social Security factors that you should definitely aim to track.
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1. Cost-of-living adjustments

Seniors on Social Security are entitled to annual cost-of-living adjustments, or COLAs, the purpose of which is to give beneficiaries more buying power in the face of inflation. This year, Social Security recipients are getting a 5.9% COLA, which is the largest boost they've seen in decades. The reason for that generous COLA, though, is that the cost of consumer goods has risen substantially since the summer.

Of course, in conjunction with COLAs, it's also important to keep tabs on Medicare premium hikes, since those can eat into seniors' raises. In fact, that's precisely what's apt to happen in 2022. While Social Security benefits may be going up, Medicare Part B is also going to cost a lot more, thereby eroding that otherwise nice boost.

2. The earnings test limit

Seniors are allowed to earn money from a job and also collect Social Security. But those who do so before reaching full retirement age (FRA) risk having a portion of their benefits withheld if their income exceeds the earnings test limit.

In 2021, workers on Social Security can earn up to $18,960 without it affecting their benefits. Come 2022, that earnings test limit is rising to $19,560. Earnings beyond those thresholds result in having some benefits withheld.

It's worth noting that the earnings test limits are higher for those reaching FRA. In 2021, workers reaching FRA can earn up to $50,520 without affecting their benefits. In 2022, that limit is rising to $51,960.

3. The value of a work credit

Social Security isn't something seniors are automatically entitled to. Rather, eligibility hinges on earning enough work credits, the value of which can change from year to year.

In 2021, a work credit is worth $1,470 in earnings. Come 2022, a work credit will be worth $1,510 in earnings.

Workers can only collect up to four work credits in a single year, and they need 40 lifetime work credits to qualify for benefits in retirement. And so for those who work on a very part-time basis, knowing the value of a work credit is essential.

Pay attention to Social Security changes

You never know when changes to Social Security might influence your financial picture -- for better or for worse. Be sure to keep following the news on Social Security so you know what to expect and, if necessary, make adjustments to your plans. You may, for example, decide to boost your hours at a part-time job to snag extra work credits in a given year. Or, you may decide to work fewer hours if you're collecting benefits and are close to exceeding the earnings test limit.

Granted, there's not much you can do as an individual when it comes to COLAs. But knowing what to expect income-wise could help you better manage your expenses during your senior years, so that's still really important information to have.

Comments / 42

Laura Depalo

Why is there nothing ever written about Social Security Disability for those of us not able to work. Some of us live on a fixed income from Social Security and I spoke to so many agents about the Flex card, increase in Dental and money added to Social Security and was denied over and over. With the increase of everything it does not even balance out. Please explain!

Adrianne Berry

as usual....just like the big raise we got from social security,then my medicare jumped from 148 to it actually,no raise on my social security check,which sure won't help 5he cost of inflation.

Angela Marie Sprague

im on ssi because I got hurt in a really bad car accident that left me in a chair and what I get a month isn't enough to last all month long . lol 6 something a month. what you supposed to do with that when you have bills and food to buy. its a joke. well I guess you have to be an inmagrent to get free stuff and more money. I even go to the theft stores and good will to see what I can get. its sad


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