How a Rising Cost of Living Will Affect Social Security

Sandra Block, Kiplinger’s Personal Finance

IF YOU RECEIVE BENEFITS, YOU’LL GET A SIGNIFICANT RAISE IN 2022 — AND HIGH EARNERS WILL OWE MORE IN PAYROLL TAXES.

Social Security beneficiaries will receive a 5.9% cost-ofliving adjustment in their Social Security benefits in 2022, the biggest jump since 1982, when benefits rose 7.4%. In 2021, the COLA was just 1.3%. The average monthly benefit will rise from $1,565 to $1,657 in 2022, or $92 a month. The average monthly payment for a married couple who are both receiving benefits will increase to $2,753, from $2,599. But given price hikes for everything from gas to restaurant meals, some seniors may discover that the pay raise will fall short of increases in their cost of living — particularly when health care costs are taken into account.

Medicare Part B premiums, which cover doctor visits and outpatient services, are rising to $170.10 per month in 2022, up from $148.50 the year before, according to the Centers for Medicare & Medicaid Services.

High earners who are subject to the Medicare Part B surcharge will pay $238.10 to $578.30 per month in 2022, up from 207.90 to $504.90 in 2021. The average premium for Medicare Part D, which covers prescription drugs, will be $33 per month in 2022, compared with $31.47 in 2021.

Higher thresholds for workers. The amount of earnings subject to the Social Security payroll tax (6.2% for employees and 6.2% for employers) will rise about 3%, to $147,000, from $142,800 in 2021. Earnings above the $147,000 payroll cap aren’t subject to the Social Security tax.

Social Security beneficiaries who have a side gig or parttime job will be able to earn a little more before they’re subject to the earnings test. If you claim benefits before you reach your full retirement age — 66 for people born between 1943 and 1954 and gradually rising to 67 for those born later —Social Security will deduct $1 for every $2 you earn above $19,560 in 2022, up from $18,960 the year before. In the year you reach your full retirement age, Social Security will deduct $1 for every $3 you earn above $51,960 in 2022, up from $50,520 in 2021. Once you reach your full retirement age, the earnings test disappears.

Sandra Block is a senior editor at Kiplinger’s Personal Finance magazine. For more on this and similar money topics, visit Kiplinger.com.

ARE YOU LOOKING TO LEAVE A LASTING LEGACY IN ANCHORAGE?

To request a confidential conversation, call 263-3855.

Your ability to make Anchorage a better community is not limited to your lifetime.

The heart of our community is more than geography—it’s the common bonds and goals we share for a brighter future. When you leave a gift for United Way of Anchorage in your estate, or as a beneficiary in your will, you create positive, lasting change for generations.

United Way of Anchorage