Even though Social Security has been here for many years, the program may change from time to time. And next year, there are some very large changes to prepare for. Here is what you should know, whether you are gearing up to get benefits soon or maybe even in the future.
1. Benefits are being boosted
The cost-of-living adjustment that is just around the corner, or COLA, for the Social Security program will be seniors’ biggest raise in decades. Benefits are being raised 5.9%, and while some of that raise will most likely be offset by Medicare Part B price hikes, seniors will likely come away with much more money than they are used to.
That said, the main reason benefits are receiving such a large raise next year is that inflation has risen a lot this year. While retirees can expect larger paychecks, they will also have to struggle with higher food prices and other rising expenses.
2. Workers will pay more Social Security taxes
Every year, there is a wage cap that controls how much income workers will have to pay taxes on. Next year, the wage cap is going up from $142,800 to $147,000. Workers who earn less will not be affected by this change, but if you earn over $142,800, you should probably expect a higher tax bill.
3. Higher income levels will be needed to earn more work credits
To be accepted into the Social Security program, you need to receive 40 work credits in your lifetime. Credits are based on income, and you can earn at most four per year.
Next year, the value of a work credit is rising from $1,470 to $1,510. which means it will take $6,040 in earnings to receive four work credits. This isn’t something that will affect full-time employees or people who are well off, but it might have a big impact on people who work a part-time job like students and young people or even people who cannot work full time due to childcare problems or other reasons.
Author: Blake Ambrose