9 Changes to Social Security You Probably Didn't Know

Since President Biden took office, all eyes have been on the White House to see if the new administration would make any changes to Social Security.

So far, there hasn't been any moves to expand benefits or otherwise modify this popular retirement program. But while Biden hasn't tried to change Social Security, some modifications have already happened -- many of which you may not have even noticed.

Here are nine of them.

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Social Security cost-of-living adjustments (COLAs) occur periodically if a consumer price index shows prices have gone up. The year 2021 was one of those years when seniors got a COLA.

In 2021, retirees received a 1.3% raise. This was one of the lowest benefit increases in years -- but was still preferable to getting no raise at all, which happens sometimes including in 2016.

ALSO READ: Are You Missing These 3 Ways to Claim More Social Security?

In 2021, the maximum Social Security benefit increased to $3,895 per month, up from $3,790 in 2020.

There's a maximum benefit because each year only so much income is subject to Social Security tax and counted toward determining your final benefits.

In order to receive the maximum, you'd need to earn up to the Social Security wage base limit every year for at least 35 working years and claim your benefits at 70.

The maximum benefit goes up because of wage growth, which results in the wage base limit rising in most years.

Remember the wage base limit mentioned above? That's the maximum amount of wages that you pay Social Security tax on.

The wage base limit went up in 2021, which resulted in wealthy workers paying Social Security taxes on a little bit more of their income. Specifically, it rose from $137,700 to $142,800.

That's $5,100 more income subject to Social Security tax, which adds up to an extra $632.40 in taxes per year. Only around 6% of Americans earn income equaling or exceeding the wage base limit, though, so this tax increase affected a very small number of people.

You become eligible for Social Security benefits by earning work credits. Specifically, you need to earn 40 credits and can earn up to four per year. So, you need at least 10 years of work under your belt to get benefits on your own work history.

You qualify for work credits by earning income subject to Social Security tax. But the amount of income you need to earn for each credit went up a little in 2021. Specifically, it rose from $1,140 in 2020 to $1,470 in 2021.

This could affect the ability of lower-earning workers to amass the credits they need to qualify for benefits.

The $17,166 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $17,166 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

Full retirement age (FRA) is when you can claim a standard Social Security benefit. For anyone born from 1943 to 1954, FRA is 66.

FRA changed, though, for people born in 1955 or later. Anyone born in 1955 has an FRA of 66 and 2 months. For those born in 1956, FRA is 66 and 4 months. Two months are added to FRA for each birth year, up until 1960 when all future retirees have an FRA of 67.

The last group of Americans with an FRA of 66 hit that milestone in 2020. That means FRA is later for everyone who reaches the age of 66 in 2021 and beyond. Retirees with a later FRA will need to either wait longer to claim benefits or accept more early filing penalties that reduce their checks.

ALSO READ: What Is Your Full Retirement Age?

Social Security benefits haven't kept pace with inflation over the years, despite COLAs.

The price index used to calculate COLAs is, unfortunately, focused on spending among urban wage earners and clerical workers. They tend to have different habits than retirees. This has resulted in benefit increases that were smaller than they'd need to be to maintain buying power.

In just two decades, Social Security checks have lost 30% of their real value, and this trend is likely to just get worse due to current rising inflation levels.

Social Security benefits get a little higher for retirees each year because of wage growth and COLAs.

But the threshold at which benefits become taxable doesn't change because it's not indexed to inflation. As a consequence, more retirees end up getting hit with taxes on part of their benefits each and every year.

Retirees who haven't hit full retirement age could temporarily forfeit some of their Social Security benefits if they work too much and earn too high an income.

The income level that triggers this forfeiture got higher in 2021. Retirees who won't hit FRA all year can now earn up to $18,960 before Social Security benefits are impacted, up from $18,240 in 2020.

For those who will reach FRA at some time during the year, the earnings limit before benefits are impacted jumped from $48,600 in 2020 to $50,520 in 2021.

ALSO READ: Here's How to Squeeze an Extra 24% Out of Social Security

Disability benefits are also made available through Social Security, and they also have an income limit.

That limit went up in 2021, with non-blind disabled beneficiaries able to earn up to $1,310 per month without losing benefits compared with $1,260 in 2020.

The $17,166 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $17,166 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

Chances are good that many of these changes flew under your radar. But whether you're a current or future retiree, it's smart to pay attention to how this important retirement benefit program changes year to year.

Understanding how it works and when benefits are modified can help you develop a better understanding of what Social Security can do for you as a retiree.

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