Social Security

Social Security Changes 2022

Social Security Changes 2022

Social Security typically undergoes some changes from year to year, and 2022 is no exception.

Michael Schultheiss

Published November 23rd, 2020

Updated May 4th, 2022

Table of Contents

Key Takeaways

  • Social Security beneficiaries are receiving a 5.9% cost-of-living adjustment (COLA).
  • Full retirement age has increased for people who turned 62 in 2021 or later.
  • Maximum taxable earnings and earnings limits have also increased.

The Social Security Administration has announced the economic changes for beneficiaries for the calendar year 2022. Beneficiaries are receiving a 5.9% COLA which is substantially higher than they saw in 2021 (1.3%). Also, the maximum taxable earnings subject to Social Security tax have also been increased. Whether or not you are eligible for Social Security yet, it is a good idea to factor these 2022 Social Security changes into your retirement plan.

Beneficiaries Received a 5.9% Increase

The cost-of-living adjustment (COLA) for 2022 is 5.9%. This COLA helps ensure Social Security benefits keep pace with inflation. The Bureau of Labor Statistics (BLS) uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to calculate the COLA for a given year. The SSA extends a COLA in the event that the CPI-W increases over 0.1% year over year between the third quarter of the previous year and the third quarter of the current year.

The Social Security increase of 2022, the 5.9% COLA, is more than beneficiaries saw in 2021 (1.3%).This comes to an average retirement monthly payout of $1,657 in 2022, compared with $1,543 in 2021.

Increase to the Full Retirement Age

Age 62 remains the earliest age at which you can claim Social Security retirement benefits. Claiming your Social Security benefits at age 62, however, will result in a permanent reduction in the payout. To avoid the reduction in the payout, you need to wait to retire and start collecting Social Security until you reach full retirement age.

Your full retirement age depends on when you were born. For people born from 1943-1954, full retirement age is 66. Full retirement age increases in two-month increments from there. For example, if you turned 62 in 2021, your full retirement age was be 66 years and 10 months. If you turn 62 in 2022 or later, full retirement age is 67 years.

You also can elect to wait beyond full retirement age to collect retirement benefits. If you wait until age 70, you can receive up to a 32% higher annual payout than if you started taking benefits at your full retirement age. After age 70, however, there are no further benefits awarded for delaying retirement.

Maximum Taxable Earnings Rises to $147,000

In 2022, the Social Security tax limit has increased to $147,000.

In comparison, 2021 had a maximum taxable earnings limit of $142,800. The 12.4% Social Security payroll tax will not change in 2022 and is split between 6.2% handled by employees and employers respectively. Self-employed persons are required to pay the full tax.

While there has been another increase in Social Security taxable income, the maximum amount of earnings the SSA uses to calculate retirement benefits has also increased. For 2021, the maximum Social Security retirement benefit for a worker at full retirement age was $3,148. In 2022 the maximum benefit has been increased by $197 to $3,345.

Earnings Limits Increase Again

Some people continue to work while collecting Social Security benefits. If you opt to continue to work while receiving Social Security benefits, all or part of your benefits may be temporarily withheld, depending on how much you earn. For 2021, the income limits have been increased again from those figures in 2020.

Before reaching full retirement age, the amount of income you can earn without having your Social Security benefits reduced is $19,560.00, a $600 per year increase over the limits from 2021. For every $2.00 in income you earn above that limit, $1.00 of your benefits will be temporarily withheld.

Once you reach full retirement age, the income limit for that year goes up considerably. In 2021, the limit was $50,520 for a person reaching full retirement age that year. The SSA has again increased those limits for 2022, extending the new limit to $51,960. For every $3.00 in income over that limit, your benefits will be reduced by $1.00, but this will only apply to the money you earned in the months prior to hitting full retirement age. After you have reached full retirement age, no more of your benefits will be withheld if you continue to work.

Social Security Disability Benefits Increased

Nearly 10 million Americans receive Social Security disability benefits. These payments increased again in 2022, albeit slightly. People who are legally blind received an increase of $70 a month over 2020, to a maximum of $2,260. For those who are not blind, the benefit has increased $40 a month, up to $1,350.

Credit Earning Threshold Goes Up

Qualifying for Social Security benefits still requires workers to accumulate at least 40 credits, and you can accumulate 4 per year. Every year, the amount of earnings it takes to qualify for a credit is increased slightly. In 2022 it now takes $1,510470 in earnings to earn one credit, up $40 from 2021.

The amount of credits needed to qualify for disability benefits continues to depend on the age at which you become disabled.

Final Thoughts

Whether or not you are eligible to start collecting Social Security benefits, the 2021 Social Security changes are a prime example that these benefits can change annually. These changes are worth reviewing more closely if you are actively retired or are approaching retirement.

Sitting down and discussing your plan with a Certified Financial Planner® is an excellent way to review your potential benefits and to get a better idea of your retirement finances.

Social Security





Social Security in 2021



Applying for Social Security

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Michael Schultheiss

Michael Schultheiss is a freelance copywriter of long-form content and other marketing communications (B2B and B2C) in the financial services and FinTech niches. In copywriting, he looks for hungry crowds. Other interests include health, fitness, and reading and writing fiction.

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