MILLIONS of Americans could see a huge boost in their Social Security benefits next year due to high inflation.
Social Security benefits are calculated based on a yearly cost-of-living adjustment, which depends on the consumer price index.
The CPI has surged throughout the past few months, due to the Russia-Ukraine war and the supply chain falling short of demand.
As a result, The Senior Citizens League is slightly tweaking its 2023 COLA projection to an 8.6 percent increase.
In 2022, the average monthly Social Security benefit is $1,657, while the maximum is $4,194 a month thanks to the 5.9 percent increase in 2022.
The increase would mean that the average benefit would climb by about $143 per month to $1,800. The maximum benefit would jump by around $361 to $4,555.
The Social Security Administration is expected to announce next year’s COLA in the fall.
Read our COLA 2022 increase live blog for the latest news and updates…
CPI: what is CPI-W?
This kind of CPI is used by the Social Security Administration to determine inflation and apply cost-of-living adjustments to Social Security and Supplemental Security Income.
The Bureau of Labor Statistics utilizes the same processes to compute CPI-W as it does for CPI, but with elements that impact specific demographics.
What is CPI?
Companies may use the Consumer Price Index, or CPI, to decide how much to modify compensation owing to inflation.
One of the most often used measures for measuring inflation is the Consumer Price Index.
What changes do recipients need to report, part two
Other life changes that need to be reported to the Social Security Administration include:
- change in citizenship or immigration status
- change in help with living expenses from friends or relatives
- eligibility for other benefits or payments
- admission to or discharge from an institution
- change in school attendance, if you are under age 22
- change in legal alien status
- sponsor (or sponsor’s spouse) changes of income, resources, or living arrangement for aliens
- leaving the US for a full calendar month or for 30 consecutive days or more
- an unsatisfied felony or arrest warrant for escape from custody, flight to avoid prosecution or confinement, or flight-escape
What changes do recipients notify SSA about?
The federal government requires recipients to report the following changes to the Social Security Administration because they could affect eligibility for Supplemental Security Income (SSI) and benefit amount:
- change of address
- change in living arrangements
- change in earned and unearned income, including a change in wages or net earnings from self-employment, including your spouse’s income if you are married and living together, and parents’ income if applying for a child
- change in resources including your spouse’s resources, if you are married and living together, and parents’ resources if applying for a child
- death of a spouse or anyone in your household
- change in marital status
How much do you pay into SS?
You must contribute 6.2 percent of your earnings into Social Security taxes every year you work, subject to specified restrictions, Yahoo reports.
If you’re self-employed, you’ll pay both the employee and employer components of the Social Security tax, bringing the total to 12.4 percent.
According to estimates calculated by the Urban Institute, the great majority of employees will get more in Social Security benefits than they pay into the system.
SS Benefit Eligibility Screening Tool, conclusion
While none of the questions are very tough, you should be prepared to provide some information before completing the questionnaire, such as:
- Work-related annual earnings.
- Other sources of annual income
- All of your assets’ total value.
- Date of beginning of disability
BEST, according to DisabilityBenefitsCenter.org, isn’t a Social Security Disability application. Your responses are kept fully private. You won’t be asked for your name, social security number, or contact information at all.
SS Benefit Eligibility Screening Tool, continued
To utilize the BEST, you must first complete a questionnaire regarding the advantages you may be eligible for.
The choices are as follows:
- Disability assistance
- Family benefits
- Spouse & widow(er)
- Supplemental Security Income (SSI)
- Veterans benefits
SS Benefit Eligibility Screening Tool
A Benefit Eligibility Screening Tool (BEST) is a collection of questions on the Social Security Administration’s website that might help you figure out if you’re eligible for Social Security Disability benefits.
It also assists you in determining the Social Security Disability benefits you are likely to be eligible for.
It takes around 10 minutes to complete the BEST survey, according to DisabilityBenefitsCenter.org.
Mitch McConnell on Social Security, continued
Scott’s proposal would compel Congress to vote on reauthorizing Social Security and Medicare on a regular basis, per Motley Fool.
It would cause significant uncertainty for seniors and might cause issues for future retirees, who wouldn’t be able to rely on Social Security to support them.
However, McConnell rejected this proposal, implying that a Republican Senate majority would not constitute a substantial immediate danger to Social Security.
Mitch McConnell on Social Security
Senate minority leader Mitch McConnell recently spoke about the future of Social Security, in response to a plan proposed by Senator Rick Scott about what the GOP might do if they take control of Congress, according to The Motley Fool.
He said: “I’ll decide in consultation with my members what to put on the floor.
“We will not have as a part of our agenda a bill that raises taxes on half the American people and sunsets Social Security and Medicare within five years.”
Beneficiaries most and least reliant on SS, continued
Among the important findings, SmartAsset discovered that residents in cities with low total retirement rely on Social Security the most, GoBankingRates reported.
Furthermore, in every location studied, Social Security benefits account for more than a quarter of retirement income.
According to the study, Miami has the lowest percentage of Social Security making up overall retirement income, at 26.90 percent.
Although several communities in California have high populations of people aged 65 and over, they rely the least on Social Security between 30.1 and 36.6 percent of total retirement income.
Beneficiaries most and least reliant on SS
SmartAsset, a financial technology firm located in New York City, has evaluated Social Security incomes for the 100 US cities with the largest population of people aged 65 and above.
This was done to evaluate where Social Security makes up the highest and lowest percentage of total retirement income, according to GoBankingRates.
The study looked at two variables from the Census Bureau’s 2020 5-year American Community Survey: average retirement income and average Social Security income.
Does Congress pay into Social Security?
Senators and members of the House of Representatives, as well as the president and vice president, federal judges, and other federal government officials and workers, are covered by the Social Security program.
They, like the great majority of Americans, pay Social Security taxes.
The 1935 Social Security Act exempted “services performed in the employ of the United States Government” from occupations whose workers paid into the system and received benefits, per AARP.
Senators and representatives were not required to pay Social Security taxes on their congressional salary, but they were required to do so on outside income such as speaking fees.
Pay into SS to get benefits?
According to NJ.com, you may be eligible for spousal benefits even if you never paid into Social Security.
The Social Security Administration provides a short online calculator that will help you figure out how much your benefits would be reduced if you start claiming Social Security early.
If you paid into Social Security but received less than half of your husband’s retirement benefits, your spousal benefit would be equal to the difference between your benefit and half of your husband’s benefit.
How to access Social Security forms?
Any forms that you may need to access, such as a Social Security card application, a child disability report, or a voluntary withholding request, are available on SSA.gov.
All of the forms are completely free.
You can call at 1-800-772-1213 or contact your local Social Security office if you can’t find the form you need or if you need assistance completing one.
You should send or deliver a paper form to your local Social Security office or the office that requested it if you downloaded, printed, and completed one.
Monthly estimated SS benefit amounts
According to Marca, the before and after estimates of monthly Social Security benefits are as follows:
- Aged couple, both receiving benefits – $2,599.00 $2,753.00
- Aged widow(er) alone – $1,467.00 $1,553.00
- Disabled workers – $1,282.00 $1,358.00
- Retired workers – $1,565.00 $1,657.00
- Disabled worker, spouse, and one or more children – $2,250.00 $2,383.00
- Widowed mother and two children – $3,009.00 $3,187.0
Boosting your SS benefits, continued
For each month from your full retirement age until age 70 that you postpone filing for benefits, the Social Security Administration increases your eventual benefit by about two-thirds of one percent – a total of eight percent for each year you wait.
That means retirees who reach full retirement age at 67 but delay claiming until 70 will get an extra 24 percent of their monthly benefit.
If the average benefit is $1,500, your check could now be reduced to $1,050 if you retire at 62.
If you wait until 70, that check will be around $1,888, assuming average benefit and eight percent year-over-year accrual beginning at full retirement age.
How to boost your SS benefits
The best way to boost your SS benefits is by holding off on filing until you reach the full retirement age of 70.
Depending on your benefit amount and at which age you decide to begin distributions, you could almost double the benefits you receive each month.
Delaying your retirement credits is a financial reward when collecting SS benefits.
When your disability worsens, part three
“There really isn’t a maximum disabled worker benefit amount that corresponds to the maximum retired worker benefit amounts we post on our website,” the SSA previously told The Sun.
Regardless of how much you’re receiving from either or both programs – your benefits could increase if your disability worsens over time.
If this happens, this could force you to work fewer hours – thus impacting your earnings – meaning you might be eligible for a higher benefit.
Also, keep in mind, that you could lose those benefits if your health winds up improving to the point where you are no longer considered disabled.
When your disability worsens, part two
In 2022, the SSI average benefit is $621 per month this year, up by $34 from 2021. This equals $7,452 each year.
As far as SSDI goes, the amount you receive is a bit more complicated.
The benefit amount will depend on the age you became disabled, your employment history (including the average amount of income you once earned), and your period of eligibility.
When your disability worsens to impact income
Those with disabilities can claim Supplemental Security Income (SSI), and/or Social Security Disability Insurance (SSDI).
To qualify for SSI, individuals can’t have more than $2,000 in assets, while couples can have up to $3,000.
For SSDI, the monthly earnings limit is $1,350 for most claimants – but that is boosted to $2,260 if a beneficiary is blind.
Death of a spouse, conclusion
Also, keep in mind, that you do not have to claim your spouse’s benefits immediately after the death occurs.
You could delay the claim until you reach your full retirement age.
In terms of how much you can get, let’s say that you are earning the average Social Security payment of $1,657 and your deceased spouse got this year’s maximum benefit of $4,194.
That’s a difference of more than $2,500.
Death of a spouse, part three
The closer you are to age 60, the less in survival benefits you are eligible for.
But once you reach your full retirement age, you can get 100 percent of your deceased spouse’s benefit.
Your full retirement age is 66 or 67, depending on the year you were born in.
Death of a spouse, continued
This is a part of survivor benefits, which a widow or widower can get if they are age 60 or older.
The benefits would range from 71.5 percent to 100 percent of your deceased spouse’s retirement benefit depending on age.
What happens when your spouse passes away?
When a spouse passes away, the impacted widow or widower can claim a $255 lump-sum payment.
Additionally, it’s possible your monthly benefit can increase if you were earning less in Social Security benefits than your deceased spouse.
https://www.the-sun.com/money/5359458/social-security-cola-payment-inflation-boost-2022/ COLA increase 2022 Social Security payment — Millions of Americans could see benefits worth $4,555 in HUGE boost in 2023