Changes to Expect from Social Security in 2018
The Social Security system is one of the most important social programs run by the government of America. According to data released in August 2017, more than 61 million people are beneficiaries of the program and no satisfactory expectations for social security in 2018. Of that number, more than 42 million are retirees. And of the retirees, more than 62% are dependent on Social Security for at least 50% of their monthly income.
October is a crucial time for Social Security as this is when the Social Security Administration releases its plans and changes for the next year. Here is a list of changes to expect from Social Security in 2018:
- There will be a 2% higher payout for cost of living adjustments, also called COLA, for Social Security beneficiaries next year. The SSA uses data with regard to Urban Wage Earners as well as Clerical Workers from the Consumer Price Index to calculate inflation rates which impact monthly payout calculations. Thanks to hurricanes Harvey and Irma, inflation went up this last quarter. However, the expectation is that most recipients on Medicare won’t get to see this 2% increase in income as it will be used up in Medicare premium payments.
- If you have reached full retirement age and have, in your career, earned more than the maximum taxable income, then in 2018, you will see a $101 increase in your monthly payout, taking it to $2,788 per month. The challenge here is that only 10% of retirees will qualify for this hike.
- Currently, workers need to pay 12.4% payroll taxes for Social Security on income of $0.01 to $127,200. However, from 2018, the upper range will increase to $128,700, which is a jump of $1,500. Earnings more than $128,700 will not be impacted by payroll taxes.
- The full retirement age for 2018 is going to increase. For next year, the full retirement age for those born in 1956 will go up by 2 months, which means they will have to wait till they are 66 years and 4 months before they can claim a 100% of their retirement benefits.
- The SSA can withhold some, if not all, of your benefits depending on how much you earn every year if you enroll in the program before you retire and you’re still working. Currently, if you have an income of more than $16,920 per year, SSA can deduct $1 for every $2 earned over that amount. However, the base threshold in 2018 will be increased from $16,920 to$17,040 per annum.
- Disability income is slated to increase in 2018. Blind people will see a $20 increase in their monthly payout, while non-blind disabled people will see a $10 increase in their monthly payout.
- Qualifying for Social Security will become a little harder in 2018 as the threshold to earn points will go up. Currently, you need to earn $1300 to get 1 work credit. In 2018, you will need to earn $1320 to get the same work credit.