Over 66 million people collected Social Security benefits in 2017. Social Security can change from year to year, and it can be hard to stay up-to-date. Here are the notable changes to Social Security for 2018:
1. Increase in full retirement age (FRA)
Social Security benefits may be claimed at the age of 62, but you will only be able to collect partial benefits and the payout will be permanently reduced. The FRA is gradually increasing by two months each year until the FRA reaches 67. This means, if you turned 62 in 2017, your FRA is 66 and two months. For those who turn 62 in 2018, the FRA will be 66 and four months. For anyone born in 1960 or later, the FRA will be 67.
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2. Higher cost-of-living adjustment (COLA)
Inflation means an automatic increase in Social Security benefits via a cost-of-living adjustment. In 2018, beneficiaries will receive a 2% increase, the highest in six years due to the economic recovery, although it’s still low compared to the 3.8% average COLA since 1975. Unfortunately, many seniors won’t see this increase as it will be wiped out by premium increases for Medicare Part B.
3. Higher taxable earnings cap
In 2017, wage income was subject to Social Security tax only up to a $127,200 threshold. In 2018, the taxable earnings threshold increases by $1,500 to $128,700. Higher-wage earners who earn up to $128,700 can expect to owe a minimum of $93 extra in tax this year. Income earned above this threshold will remain untouched by Social Security payroll tax.
4. Higher earnings limits
If you haven’t reached your FRA, you can still work and earn up to a certain threshold without reducing your benefits. For 2018, the threshold earnings value is $17,040. For anything earned above that point, benefits are reduced by $1 for every extra $2 you earn. During the year in which you will reach your FRA, the earning limit is $3,780 per month. Extra income will reduce benefits by $1 for every extra $3 you earn.
5. Higher beneficiary payments
The average benefits check will increase by $27 per month for individuals and $46 for couples. The maximum benefit is also experiencing a 3.7% increase from $2,678 per month to $2788. Supplements Security Income (SSI) disability payments are also set to increase to $750 for individuals and $1,125 for couples.
6. Social Security credit increase
To be eligible for Social Security, you must earn 40 earnings credits over a lifetime, and each credit requires $1,320 in earnings.
7. Online accounts
The SSA is going green and now requires beneficiaries to sign up for a my Social Security account where you can check your earnings statements and review your estimated benefits. In addition to keeping track of your records and benefits, my Social Security also allows you to keep up with all other changes to SSA. Click here to sign up for a my Social Security account.
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