Wiregrass Seniors Magazine May 2018 MAY ISSUE | Page 21

WiregrassSeniorsMagazine.com
SOCIAL SECURITY Q & A
Page 21
Changes in the wage base are
determined by the national
wage growth. Because
Social Security Changes for 2018
2016 saw no change,
The Social Security Administration released its adjustment the 2017 adjustment
reports for 2018. Here is what you need to know about the accounted for two years
changes being made to Social Security in 2018 and how of growth. That was not
they’re probably going to affect you.
the case this year.
1. You’ll (sort of) get a raise
With the release of the January 2018 Cost of Living Adjust-
ment, Americans can now stop wondering what will happen
to their monthly payouts. This year, seniors will receive a
2% increase in COLAs, which amounts to about $27 per
month more on average. Singles will receive an average of
$1,404, and couples who are both receiving payments will
receive $2,340, a full $46 more monthly. The maximum pos-
sible Social Security benefit for those who begin c ollecting
benefits at full retirement age will also increase to $2,788 in
2018.
3. An older retirement age
People will have to wait a little longer to retire.
Something unique about the 2018 Social Security changes is
that the full retirement age will rise. Everyone born between
1943 and 1954 must wait until they are 66 to receive 100%
of their monthly benefit. Full retirement age for those born in
1956 is now 66 and 4 months. This is a two-month increase
from 2017, when the full retirement age for people born in
1955 ticked up to 66 and 2 months.
Your relaxing retirement will have to wait if you don’t
want a reduced payout.
You can sign up for Social Security at age 62, but you’ll re-
ceive a reduced payout. It’s not until you reach your desig-
nated full retirement age that you’ll get your full benefit. This
means older workers affected by this change will have less
time to boost payments via delayed claiming.
An increase in Medicare Part B premiums might ne-
gate the cost of living adjustment
In 2017, Americans saw benefits increase by just 0.03%,
so this increase is a welcome change of pace for those living
on a fixed income. The COLA hasn’t been this high for six
years. But don’t break out the champagne and credit cards
just yet. Most Americans won’t notice any difference in their
monthly checks, as the increase in Medicare Part B premi- The earnings limit is increasing for those working while
ums automatically deducted from your benefits will likely receiving benefits.
While there’s no law prohibiting you from working and re-
offset any boost.
ceiving benefits simultaneously, there is an earnings limit for
2. A higher tax cap hits wealthier Americans
people who retire before their full retirement age. Fortunately,
Workers are required to pay a 12.4% payroll tax into So- this limit will increase in 2018. Next year, the limit will rise to
cial Security, but your employer usually picks up 50% of the $17,040, up $120 more than in 2017. The earnings limit ex-
tab. This means most Americans will pay 6.2% of their earned pands by $480 to $45,360 for those who reach full retire-
income to Social Security until their income exceeds ment age in 2018.
$127,200. In 2018, however, this cap rises $1,500 to
$128,700, meaning wealthier individuals should expect to What you need to know about earnings penalties
fork over an extra $93 in tax at minimum next year. How- Working during retirement is a wise choice, but even with
ever, those who earn more than the taxable maximum will larger earnings limits, you’re still at risk of penalty should you
not have those earnings taxed.
exceed the ceiling. If you earn too much, Social Security will
The Social Security Administration predicts roughly 12 mil-
lion people will pay higher taxes beginning January 1, 2018,
as a result of this change. At first glance, this may anger
those who are affected by the jump, but when you look at
the bigger picture, it’s much more reasonable. Last year, the
wage base increased a whopping $8,700, or roughly $540
more per month.
withhold $1 for every $2 earned above the limit. The penalty
decreases for those at full retirement age to $1 withheld for
every $3 earned above the limit.
No need to panic, though. Your penalties are held captive
only until you hit full retirement age, at which point you’ll re-
ceive credit for any and all benefits withheld in the past.