If you follow the news, you may realize that inflation is rising, gas prices are rising and the stock market is stuck in a continuing decline. But how current are you in the field of social security?
If you are not yet of the age at which you are receiving benefits, social security may not be on your radar, and that is understandable. However, it is important to keep the program under control.
First, these benefits may end up for you as an important source of income. And the moves you make during your work years can give you more benefits.
In addition, even if you do not currently collect social insurance, if you make money, you pay taxes to finance them. And that’s why it’s important to understand what those taxes look like. With that in mind, here are some recent social security changes you may not know about.
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1. The benefits increased by 5.9%.
Why should you care how social security has increased this year when you are not receiving benefits yet? Namely because you should know that 5.9% was the biggest increase in the program in a decade – and it is already lagging behind due to rapid inflation levels.
Understanding social security shortcomings should actually make you build your own nest, rather than planning on returning to these benefits. Chances are they won’t do a good enough job to cover your living costs for seniors – by far.
2. The wage ceiling has increased
Social security receives most of its income from payroll taxes. But workers do not pay these taxes on all their earnings. Instead, an annual ceiling is introduced.
Last year, salaries of up to $ 142,800 were subject to social security taxes. This limit has been raised to $ 147,000 this year. If you have a higher income and you are not sure why your payouts have dropped, this might be your answer.
3. The value of work credits has increased
The possibility to choose social insurance in retirement is not a matter of course. To be eligible, you will need to earn enough money to earn 40 work credits in your lifetime.
The value of a work credit varies from year to year, and you can earn up to four work credits a year. Last year, one work credit was worth $ 1,470. This year you will need $ 1,510 to earn a working credit.
If you have a full-time job, work credits are something you probably don’t have to deal with. But if you work part-time, it pays to watch the value of work credits.
While Social Security isn’t something you’ve been planning to collect for decades, it’s still important to keep up with program changes. Some of these changes can affect you immediately, even if you are years away from leaving the job.
In addition, as mentioned, knowing how the program works can help you make smart decisions when you are younger, leading to higher benefits. If you can expand your work skills and gain a salary increase, for example, this could lead to more generous benefits. And that’s something your future self will thank you for.
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