2022 Social Security and Medicare Changes

by Roger Shake, CFP®, RLP®, CeFT®                        February 2022

There’s good news and bad news for Social Security in 2022, plus some useful information.

First, the good news. Social Security retirement benefits have increased by 5.9%, the biggest annual cost-of-living increase in 40 years.

People who turn 62 in 2022 — meaning they are newly eligible for Social Security — have two things to cheer about. The 5.9% COLA will be factored into their future benefits even if they don’t claim benefits until later. Plus, those newly eligible beneficiaries, who were born in 1960, can expect an increase in their future benefits based on an increase in the latest average wage index rather than the previously forecast decline.

Social Security benefits are based on a complicated formula that adjusts a worker’s top 35 years of career earnings to changes in the average wage index up through age 60. Such indexing ensures that a worker’s future benefits reflect the general rise in the standard of living that occurred during his or her working life.

Now for the bad news. Much of the 5.9% annual increase in Social Security benefits will be offset by higher Medicare premiums, which are usually deducted directly from monthly benefits. Monthly premiums for Medicare Part B, which covers doctors’ fees and outpatient services, will increase to $170.10 in 2022, up 14.5% from the 2021 premium of $148.50 per month.

Higher-income retirees subject to income-related monthly adjustment amounts, or IRMAA, will pay even more, ranging from an extra $68 to an extra $408.20 per month per person. Medicare Part D prescription drug premiums are also subject to separate monthly high-income surcharges.

You may have seen headlines that the Social Security trust funds are now expected to be exhausted in 2034. At that point, FICA tax revenues would only be able to fund about 75% of promised benefits. We would anticipate that Congress will enact program reforms before then. Potential solutions include raising payroll tax rates, boosting taxable wage limits, increasing future full retirement ages or enacting a variety of benefit changes, such as altering how cost-of-living benefits are calculated.

Useful Information. Between 2010 and 2021, Social Security Administration’s (SSA) operating budget shrank by 13% even as the numbers of beneficiaries grew by 22%. In 1985, SSA employed 81,000 workers; today, there are fewer than 60,000 employees. Prior to the pandemic, SSA offices averaged 175,000 visitors each day, for a total of more than 40 million in-person visits each year.

While Social Security benefits continued uninterrupted throughout the pandemic, customer service declined precipitously when the more than 1,200 field offices closed to the public in March 2020. Currently, appointments are available on a limited basis for dire emergencies and for “express service” interviews that allow individuals to submit the proof of identity that’s needed to apply for an original Social Security card or update information such as a name change or citizenship. Everyone else is encouraged to access services online or on the phone (800) 772-1213. After reaching an agreement with its three labor unions in January, the Social Security Administration announced plans to bring employees back to the office at the end of March, two years after local offices were shuttered in 2020. The agreement requires its employees and members of the public to wear masks, regardless of their vaccination status.

One of the silver linings of the pandemic is the Social Security Administration significantly expanded the services that can be accessed online. Today, you can apply for retirement, disability and Medicare benefits online, check the status of an application or appeal, request a replacement Social Security card in most states (except Alaska, New Hampshire, Oklahoma and West Virginia), print a benefit verification letter and request a 1099 documenting benefits for income tax purposes.

For those not yet retired, it is important to keep track of your future Social Security benefits and income earnings history. In 2011 the Social Security Administration discontinued mailing out annual statements and went to online delivery. To receive your electronic statement, go to www.ssa.gov/onlineservices/ and create your individual secure account.

What does this mean for me and my financial situation?

Legacy Consulting Group is uniquely qualified and experienced in helping pre-retirees and retirees sort through and coordinate their Social Security, 401(k), IRA, Pension and Investment assets within the framework of a Financial Life Plan. Let’s start a conversation about how we can help “Bring Your Wealth To Life.” Reach us at (972) 599-4750 or www.LegacyConsultingGroup.com.


  • Legacy Consulting Group is registered as an investment adviser with the SEC and only conducts business in states where it is properly registered or is excluded from registration requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability.
  • Information presented is believed to be current. It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. You should consult with a professional advisor before implementing any strategies discussed.
  • All investments and strategies have the potential for profit or loss. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. There are no assurances that an investor’s portfolio will match or exceed any particular benchmark.
Recommended Posts