When you receive your first Social Security check this year, chances are good it is going to look different from the check you received in December.
There are some good reasons the amount you get might not be the same as it was last year. Here is what you should know about how your SS check might have changed after the beginning of the new year.
1. You’ll receive higher monthly benefit checks
The first change is great news for retirees. The monthly benefit check in Jan. should be bigger than the one you got last year.
This increase in your benefits is because of a cost-of-living adjustment (COLA). More Specifically, because of higher inflation, retirees will get a 5.9% raise this year. This is intended to help make sure you do not lose ground as prices increase on the cost of goods and services. It is the largest raise in decades due to inflation is spiking.
Do not expect the full 5.9% raise in each check, though. The Medicare premiums also increased. If you have premiums taken directly from your SS payment, you will notice some of that raise disappear due to your higher premiums.
2. There may be more taxes are taken out
When you apply for Social Security benefits, you could elect to have taxes taken from your checks, so you do not have to worry about paying the estimated taxes to the IRS. You can choose which amount you want the Social Security Administration to deduct 7%, 10%, 12%, or 22% of your benefit each month. If your benefit increases and you are having taxes taken out on a percentage basis, the SSA will obviously keep more of your money in 2022.
You might also want to change your withholding or ask the SSA to withhold money if you will be subject to paying taxes this year and you haven’t been in the past.
Provisional income is 50% of Social Security benefits, some non-taxable income and all taxable income. After your provisional income reaches $32,000 as a married joint tax filer or $25,000 as a single tax filer, know in advance that some of your benefits will be taxed.
You should Understand both of these changes is important to financial planning for 2022. So, when you receive your first Social Security check this year, be on the lookout for them.
Comments are closed.