Money never sleeps, and changes to the way that it works for you and your future happen regularly and often. If you are a Social Security beneficiary, then your benefits are no exception. A number of changes have already been implemented for 2017; if you are not aware of what they are and how they will affect you, consider the following.
An increase in benefits
According to AARP.com contributor Eileen Ambrose, the foremost change that the nations 60 million Social Security beneficiaries may have noticed is an increase in monthly benefits. Beginning in January, Social Security payments increased a modest 0.3 percent, or approximately $5 per month on average. This increase, according to U.S. News & World Report Senior Editor for Retirement Emily Brandon, is a typical cost-of-living adjustment that brings the average monthly payout for retired workers to $1,360 and the average for retired couples to $2,260. Brandon notes that cost-of-living adjustments can range from zero percent (there was no cost-of-living adjustment for 2016, for example) to the record high of 14.3 percent in 1980.
Retirement age goes up
Where the retirement age has held at 65 years of age, 2017 sees the full retirement age for people born between 1943 and 1954 climb to 66. According to Ambrose, the full retirement age is expected to increase by two months every year henceforth until it reaches 67 years for retirees born in 1960 or later.
Increased tax cap, earnings limit and max benefit
Another major update to Social Security in 2017 is the increase of the cap on maximum taxable earnings from $118,500 in 2016 to $127,200. Brandon writes that this increase is attributed to an uptick in average wages and Ambrose reports that this cap increase is expected to affect about 12 million of the 173 million who pay into Social Security. As Brandon also notes, the standard 6.2 employer match remains intact.
Additionally, the Social Security earnings limits for beneficiaries aged 65 and younger has increased to $16,290, up $1,200 from 2016s limit.
Social Security beneficiaries who earn more than this amount will have $1 in benefits withheld for every $2 in earned income over the limit, Brandon writes. For those who will turn 66 in 2017 the earnings limit increases by $3,000 to $44,880, and the payment reduction declines to $1 withheld for every $3 earned in excess of the earnings limit.
2017 also sees a $48 increase to the maximum payout for someone retiring at 66 to $2,687, though Brandon notes that this total could be higher for those who delay receiving payments until after the retirement age.
File and suspend and double claiming option discontinued
Couples aged 66 and older where both parties are income earners were previously able to collect spousal payments equal to half of the highest earners benefit amount prior to switching to payments based on their own work record and collecting additional credits from delayed claiming. According to Brandon, double claiming is not available to anyone who turned 62 on January 2nd, 2016 or later, as both retirees will now automatically receive the higher benefit option without the option to collect both types at different stages.
Retirees had the option in the past of claiming retirement benefits and suspending them between the ages of 66 and 70, which would in turn increase monthly payments upon resumption. A new rule states that benefit suspensions requested after April 30, 2016 will additionally stop payments to family members that are based on your work record during the period of the benefit suspension. As Brandon notes, this rule does not affect divorced spouses.
Social Security benefits are prone to frequent change, so the best way to keep track of how your money is working for you is to stay abreast of new rules and changes to benefits. When in doubt, consult with a financial expert and learn how changes to the program might affect your retirement plans.