November 4, 2021
  • November 4, 2021

How will your social security benefits compare to the 2022 average?

By on October 27, 2021 0

Social Security benefits are an important source of income for most older Americans. And, the good news is, the typical senior will see a little more money next year with an increase in the average retirement benefit.

If you collect Social Security, your benefits will increase. Wondering how much your raise will be and how it will compare to the average benefit your peers will receive? Here’s what you need to know.

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This is the average Social Security benefit in 2022

In 2022, the average benefit that seniors will receive is $ 1,657 among all retired workers. This is an increase of $ 92 from the average FRA benefit of $ 1,565 in 2021. The average benefit increases because retirees benefit from a cost of living adjustment (COLA) of 5 , 9%.

COLAs are awarded in most years, but not all, to help benefits maintain their purchasing power. Since prices increase each year, Social Security benefits would buy much less over time without COLA. This is why the prices on a consumer price index called CPI-W are compared every year. If the CPI-W shows a year-over-year increase, retirees see more money in their Social Security checks starting in January.

How to assess your advantage over the average

So how will your profit compare to next year’s average? You will need to know what your benefit will be to find out.

If you’re already retired and collecting Social Security income, simply multiply your current check amount by 5.9% to account for COLA and see how much your new monthly income will be. If you are currently receiving $ 1,100 per month, for example, your payment amount next year would be about $ 1,165 after applying the 5.9% COLA.

However, you will not necessarily receive a check for this amount, as part of your annual increase will be absorbed by a likely increase in health insurance premiums. Still, doing this math can give you a good idea of ​​what your new income will be and how it compares to what your peers are receiving.

If you have not yet started your Social Security checks but are considering doing so, you can log into your mySocialSecurity account to see what your monthly income will be based on your age when you apply for benefits. You can compare it to the national average.

No matter what you find, remember that an average benefit means that many retirees receive more and many receive less than that average. If your benefit is less than $ 1,657, it may be because you requested it earlier. Retirees see their monthly checks decrease if they deposit before retirement age at full rate. Your benefits could also be below average if you earned less than your fellow Americans or had a short career, as benefits are based on wages over a 35-year career.

If your performance is above average, on the other hand, it’s probably because you earned more than most of your peers or waited to deposit checks.

Whether you beat the average, come below, or earn roughly that amount, it’s also worth remembering that you can’t live on Social Security alone. So make sure you have enough extra savings to support you if you plan to retire. And if you’ve already left the workforce, aim to maintain a safe withdrawal rate so that your nest egg can continue to cover expenses that Social Security doesn’t cover.

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