Empyrion Wealth Management

In October, the Social Security Administration (SSA) announced changes in its program due to take effect on January 1, 2018. Those approaching retirement and those already retired and receiving Social Security benefits will want to take particular note of five changes announced by the SSA on their fact sheet:

1. Cost-of-Living Adjustment (COLA): Each year, the SSA reviews the Consumer Price Index (CPI) for the previous four quarters to assess the rate of inflation. It then determines whether a COLA will be granted for the following year’s payments. For 2018, Social Security beneficiaries will receive a 2 percent increase in their payments, the largest increase since 2012’s 3.6 percent raise. For beneficiaries receiving the average monthly payment of $1,377 in 2017, this will amount to an increase of about $27 per month.
2. Higher Maximum Taxable Earnings: The amount of annual income on which an employee must pay the 6.2 percent Social Security tax will increase from $127,200 in 2017 to $128,700 in 2018. Any amount paid to an employee above $128,700 will not be subject to the Social Security tax. Of course, the flipside of this change is that the amount of earnings the SSA uses to calculate the maximum benefit will also increase. This means that the maximum possible benefit for a single worker who begins receiving benefits at full retirement age will go from $2,687 per month to $2,788.
3. Higher Full Retirement Age: And speaking of full retirement age, that has increased for 2018, as well. For persons who turned 62 (the earliest age at which retirement benefits can be claimed) in 2017, the full retirement age is 66 and two months. But for those who have their 62^nd birthday in 2018, full retirement age is 66 and four months. The SSA will continue to add two months per year to the full retirement age until reaching the goal of 67 as full retirement age. For anyone born in 1960 or later, 67 will be full retirement age. It’s important to remember that those who elect to delay receiving benefits until after their full retirement age will receive increased payments. For example, someone who waits until age 70 to begin receiving Social Security benefits can expect a benefit about 32 percent larger than if they started receiving payments at full retirement age.
4. Higher Earnings Limits. Persons who work while receiving Social Security benefits are subject to limitations on how much they can earn without having their Social Security benefits reduced. A beneficiary who is less than full retirement age can earn up to $17,040 in 2018, up from $16,920 in 2017, and still receive the full benefit available. Persons who reach full retirement age in 2018 can earn up to $45,360 (up from $44,880) without any reduction to their Social Security benefit. Once a beneficiary reaches full retirement age, there is no limitation on earnings.
5. Higher Disability Thresholds. Persons who are legally blind and receiving Social Security disability benefits will receive a maximum of $1,970 per month (up from $1,950 in 2017), and non-blind disabled beneficiaries will receive a $10 increase, up to $1,180 per month.

Especially if you are approaching retirement age or nearing eligibility for early benefits, you should claim and/or verify your account at myssa.gov. The SSA has instituted new security procedures to help you avoid identity theft, but it is important for you to check your account at least yearly (on your birthday or at the first of each year) to make sure that all your information is correct and up to date.

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