Effective Jan. 1, 2022, Social Security recipients will see an increase in their monthly checks. Additionally, the cap on taxable income to help fund Social Security benefits will also be increasing.
The cost-of-living adjustment will be 5.9% in 2022 — the largest increase to the benefits in nearly 40 years. The nearly 70 million Americans who collect Social Security benefits will receive an additional $100, on average, to their monthly Social Security checks.
Additionally, maximum earnings subject to Social Security payroll taxes will rise to $147,000 in 2022, up $4,200 from 2021.
The increased 2022 COLA is aimed to help Social Security beneficiaries and their families offset continually rising costs and high inflation. Historically, for much of the past decade, the COLA had been under 2%.
As a result, many workers may see a smaller net pay on their paychecks. Employers should be aware of the rising COLA. We recommend you inform your affected employees that they may see slightly reduced paychecks.
Finally, employers should also ensure their payroll systems are updated to account for the increased taxable wage cap.
For any questions regarding Social Security benefits, please contact CanopyNation today at hello@joincanopynation.com.