Social Security
What is the maximum amount you can earn from Social Security in 2021?
The current maximum would mean nearly $47,000 a year and this is set to increase in 2022 thanks to the COLA adjustments.
Despite the turmoil of this week's debt limit being reached, and the potential impact it could have had on Social Security payments, the news of the short-term spending bill is only good news for recipients. Payments will continue as usual.
The terms of how much money payments will be for seniors depends mostly on the age of retirement. The most an individual who files a claim for Social Security retirement benefits in 2021 can receive per month is:
- $3,895 for someone who files at age 70,
- $3,148 for someone who files at full retirement age (currently 66 and 2 months),
- $2,324 for someone who files at 62.
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How can this be achieved?
For retirees, the main factors taken into consideration are the age of retirement and the 35 years in which the worker earned the most, as an annual average.
In 2020, around 74.2 percent of those receiving Social Security benefits were retirees, with the average benefit amount being $1,544. The maximum benefit amount depends on the year one retires. Those who chose to retire before 65 are penalized with lower benefits.
How is it changing for 2022?
For 2022, the Cost of Living Adjustment (COLA) is projected to be around 6 percent. This means that the amount received will increase by 6 percent, to a maximum of $4,128 per month. While this growth seems large, due to the high rate of inflation that the US is experiencing it will not actually be as large, but still represents a real-terms increase.
The COLA is not usually so large, but the high inflation for 2021 means payments need to match it, or seniors will fall into poverty. One of the big reasons for the high inflation is the increase in gas prices. The US has been pushing for Gulf states to increase their oil output in an attempt to arrest the cost of gas. This has also been keenly felt in Europe, leading to soaring electricity costs in Spain and the United Kingdom.
To counter high inflation, the Federal Reserve could raise interest rates. However, it has been shy to increase them, as fears of covid-19 have kept the central bank nervous for the US's economic growth. The announcement on the value of the COLA increase will be in mid-October.