As you plan for retirement, Social Security will comprise an important part of your overall strategy. But because rules and procedures change occasionally, the plan you created a few years ago might not be possible to implement in the future when you retire. That’s why it’s important to stay on top of any changes announced by the Social Security Administration.
For 2017, a few changes have been announced. As always, we strive to keep you up to date on any news that might affect you… So here’s a brief summary of those changes.
The average payment is set to increase by a small amount. In most years, Social Security benefits are adjusted a bit to account for inflation. This adjustment can range anywhere from a few dollars to a more substantial amount (in years that inflation grows rapidly). For 2017, the cost of living adjustment is just 0.3 percent, because our inflation rate is barely above zero right now. That will amount to about five dollars per month for the average beneficiary.
The maximum taxable earnings cap was raised. Current Social Security benefits are supported by taxes, with most workers paying 6.2 percent of their earnings toward the program, up to a certain limit. This taxable earnings cap has been raised from $118,500 to $127,000, meaning the program will receive more tax dollars next year.
The earnings limit for beneficiaries has been raised. If you plan to continue working after filing for your Social Security benefits, listen up: Until you reach full retirement age, part of your benefits could be withheld if you earn more than the limit. In 2017, you can earn a bit more, because the limit has been raised from $15,720 to $16,920.
Married couples should change their plans. The file-and-suspend method of claiming benefits has been eliminated. Now, married retirees will receive either spousal benefits or their own benefit amount (whichever is higher), and you cannot switch to another benefit option at a later date.
All of these changes sound confusing, but that’s because Social Security is a massive, complicated program. It’s important to keep updating your retirement plan every few years as these changes take place, so give us a call. Together we will review your plan, decide if any of these changes will affect you, and help you make adjustments to your retirement strategy.