When will those first fatter 2022 Social Security payments with that 5.9% increase hit beneficiary bank accounts? Depends on their birthday.
In an effort to ensure that payments go out smoothly, the process of sending out payments to Social Security’s roughly 64 million beneficiaries is staggered into three waves according to the recipient’s birthdate.
Anyone who was born on a date between the 1st and 10th of the month will be paid their Social Security benefit on the second Wednesday of the month, which means this month that will be Wednesday, January 12.
Those born on the 11th of the month through to the 20th of the month will get their payment on the third Wednesday of the month: Wednesday, January 19.
Finally, the last group to benefit from the COLA increase in 2022 will be those whose birthdates are on the 21st of the month or later. This group will get their Social Security benefits paid on the fourth Wednesday of the month: Wednesday, January 26.
Meanwhile, those roughly six million Americans who receive Supplemental Security Income (SSI) likely already received their first payment of 2022, as they were scheduled to go out on Dec. 30. 2021.
Throughout 2022, SSI payments should arrive in the recipients’ bank accounts on the first of the month, aside from months when that date falls on either a Saturday or Sunday.
The Social Security Administration mailed notices to all recipients in December to alert them to their 2022 Cost of Living Adjustment (COLA), but the information can also be found online in the message center in recipients’ my Social Security account.
Medicare increase eats into COLA gains
The Social Security Administration announced the 5.9% COLA last October. It’s the highest Social Security inflation adjustment in 40 years and will increase an average monthly retirement benefit of $1,565 to roughly $1,657, an increase of $92. The average retired couple’s collective payment of $2,599 per month will increase to $2,753, an extra $154 monthly for two people.
Of course, some of this Social Security COLA increase will immediately be eaten up by the largest Medicare Part B monthly premium increase in history: 14.5% in 2022. Medicare Part B premiums are automatically deducted from Social Security benefits.
While Social Security benefits have a “hold harmless” rule to ensure that recipients don’t receive less from year to year due to inflation or increases in Medicare Part B premiums, this huge increase will negate the Social Security COLA increase for some beneficiaries.
“The Part B increase from $148.50 to $170.10 per month is the highest since 2016 and will consume the entire annual cost of living adjustment (COLA) of Social Security recipients with the very lowest benefits, of about $365 per month,” according to Mary Johnson, a Social Security and Medicare policy analyst for The Senior Citizens League. “Social Security recipients with higher benefits should be able to cover the $21.60 per month increase, but they may not wind up with as much left over as they were counting on,” Johnson said after the Medicare increase was announced last November.
Medicare Part B premiums grow even faster percentage-wise almost every year, far outpacing the rate of growth in the COLA. A recent survey by The Senior Citizens League found that 44% of Medicare recipients report spending from $160-$495 a month on healthcare costs.
“That’s significant portion of income to spend on medical expenses, considering that the average monthly Social Security benefit (including retirees, disabled and survivors) is about $1,487,” Johnson said.
Johnson’s research has found that rising Part B premiums have ranked as one of the fastest growing costs that older Americans face in retirement, increasing 274% since 2000.
• Maximum benefit amount: The maximum monthly Social Security benefit in 2022 for the highest earners is $4,194, which will provide $50,328 over the course of the year. But the vast majority of Americans earn far less than what it takes to get the maximum benefit. In 2021, the average worker’s annual salary was $90,748 below the amount needed to claim the largest Social Security benefits.
• Earnings test limit: In 2022, seniors below full retirement age who are claiming Social Security can earn up to $19,560 in income from jobs without having their Social Security benefits impacted. That’s up slightly from $18,960 in 2021.
• Higher payroll tax: In 2022, the Social Security wage cap has risen from $142,800 to $147,000, leaving high-earners liable for taxes on an additional $4,200 in income. Earnings above that amount are not taxed for Social Security purposes.
SEE ALSO:
• 4 Biggest Social Security Worries Heading Into 2022
• It’s Official: 2022 Social Security COLA is Highest in 40 Years
• IRS Bumps 2022 401k Contribution Limit By $1,000