Retirement changes affect everyone, from retirees to people in their 20s. Next year, you can expect sweeping changes to social security policies and an updated age to receive full retirement benefits. Let’s look at what’s changing about retirement in 2022.
Social Security Checks
Good news for all the retirees out there: social security checks are increasing! Next year marks the biggest increase in benefits since 1983, which gives all recipients a raise of 5.9 percent. As day-to-day necessities like food and health care rise in cost, retirees can undoubtedly use an average enhancement of $92 extra each month.
More Payouts for High Earners
The year 2021 saw the maximum monthly payout for social security capped at $3,148, but that number is increasing to $3,345 in 2022. An additional $197 per month for the highest earners is a significant increase, but it comes with strict criteria.
Retirees must have worked at least 35 years until the full retirement age and have reached or exceeded the maximum taxable earnings for all 35 years to be eligible for this monthly payout increase.
Full Retirement Age Increase
Most people know that there’s a window in which each person must begin to claim their retirement benefits. If you take them as soon as you’re eligible, which is currently at age 62, you’ll receive lower benefits for the rest of your life than if you’d waited. The longer you wait to claim your benefits, the higher your monthly payments will be.
People born in 1959 and earlier can enjoy full retirement benefits at age 66, while those born in 1960 or later must wait until they’re 67 to get the maximum benefits.
Updated Contribution Limits
Everyone actively saving for retirement should pay special attention to the updated contribution limits so that you can maximize your savings! In 2021, you could save $19,500 as an elective deferral for your 401(k), but that number is now up to $20,500. However, the catch-up amount hasn’t changed from $6,500 for people over 50 years old.
Now that you know what’s changing about retirement in 2022, prepare yourself for these new updates to maximize your savings!