What is the amount of my social security contribution in 2022? – Councilor Forbes

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In October, the Social Security Administration (SSA) announced a cost of living adjustment (COLA) of 5.9% for Social Security benefits, the largest increase since 1982.

This increase will take effect for 62 million Americans who collect Social Security benefits in January 2022. Americans who collect SSI benefits will see theirs increase a little earlier, starting December 30, 2021.

But how much is the new monthly benefit for the average American? And will the larger payments combat the effects of inflation on household goods and health care?

How much are my social security payments in 2022?

The 2021 average monthly benefit for all retired workers was $ 1,565. A 5.9% increase will bring the average benefit to about $ 1,657, or about $ 100 per month. For workers with disabilities who receive Social Security benefits, they can expect an average increase of $ 76 per month.

The 2021 average monthly benefit for SSI is $ 794 per month and is expected to increase to $ 841 for 2022, an increase of $ 47. About 3 million Americans who receive both Social Security and SSI benefits will also benefit from these changes.

The SSA will notify Social Security and SSI benefit recipients of their new benefit amounts by mail and online (through their social security account) from December.

How COLA increases have evolved over time

Each year, SSA announces any increase in Social Security benefits, known as COLA, to help beneficiaries cope with rising prices. The increases are linked to the consumer price index for urban and office workers (CPI-W), which is the official measure of the monthly change in the prices of goods and services. Each year, the SSA compares the CPI-W for the third quarter of the previous year and the current year to determine the increase in COLA.

While COLA adjustments are now automatic, this was not always the case. Recipients received their first COLA adjustment in October 1950. A second increase was introduced in September 1952 by law. Over the next 20 years, beneficiaries only saw their benefits increase if Congress approved it.

In 1972, Congress passed legislation providing for automatic increases linked to increases in consumer prices. Recipients would no longer have to wait for Congress to take action to receive a raise. The first automatic increases in social security benefits came into effect in 1975. After 1982, COLA adjustments were effective for December of each year and received by beneficiaries in January.

Here is a history of COLA increases from 1975 to 2021:

Social Security Cost of Living Adjustments
1975 8 1995 2.6 2015 0
1976 6.4 1996 2.9 2016 0.3
1977 5.9 1997 2.1 2017 2
1978 6.5 1998 1.3 2018 2.8
1979 9.9 1999 a 2.5 2019 1.6
1980 14.3 2000 3.5 2020 1.3
nineteen eighty one 11.2 2001 2.6 2021 5.9
1982 7.4 2002 1.4
1983 3.5 2003 2.1
1984 3.5 2004 2.7
1985 3.1 2005 4.1
1986 1.3 2006 3.3
1987 4.2 2007 2.3
1988 4 2008 5.8
1989 4.7 2009 0
1990 5.4 2010 0
1991 3.7 2011 3.6
1992 3 2012 1.7
1993 2.6 2013 1.5
1994 2.8 2014 1.7

Rising prices are the main driver of rising social security payments

During the pandemic, the demand for food, cars, gasoline and other goods increased. And as the country began to open up, businesses struggled to keep up with growing demand. This created a rise in prices, pushing inflation up to 5.3%, which is the biggest increase since August 2008. Rising inflation is the main driver behind the increase in social security payments.

The current average price of gas is $ 3.42 per gallon, according to the American Automobile Association (AAA). Food prices have also increased over the past year. In 2021, food purchases, including groceries, increased 2.1%. The cost of food outside the home (restaurants) increased 3.3% from 2020, according to the United States Department of Agriculture (USDA).

Since the first automatic increase, beneficiaries have received increases almost every year, but there have been three years (2009, 2010 and 2015) where beneficiaries have not received any COLA adjustments. During these years, the CPI-W has not increased and in some cases there could be a drop in inflation. However, even if this happens, social security benefits are never reduced.

Employees will pay more social security taxes

The increase in Social Security benefits has to be paid for by someone: American workers.

The SSA has announced increases to the base salary, which is the maximum amount an employee pays in Social Security taxes. The maximum amount of an employee’s salary subject to SS taxes increased from $ 142,800 in 2021 to $ 147,000 for 2022, an increase of 2.9%.

An employee pays 6.2% social security contributions on earnings up to the maximum amount, while an employer pays the equivalent of 6.2%, for a total of 12.4% of the social security contributions paid.

The same limits apply to the self-employed, only they are responsible for the two parts of the tax.

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