Important Changes to Social Security in 2017 You Must Know

There are a number of significant changes to Social Security in 2017 that people need to be aware of. All of these will impact current and future recipients.

Increase in Payments

Monthly payments had a slight increase starting in January 2017. The increase is known as the cost-of-living adjustment and is an improvement over the zero increase from 2010, 2011 and 2016.

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Type of Payouts

In the past, couples could choose to receive spousal payments which are half the person with the higher earnings benefits. Then, they could switch to their own benefits which would be higher because of the delay in claiming. Now, the person will have to choose which one they want and stick with it. Switching is no longer allowed.

Higher Cap on Payments

Another change which impacts Social Security as well as workers paying into the fund is the higher cap on taxes. In the past, workers paid into Social Security on earnings that capped out at $118,500. Any income earned over this amount was not included in taxes. That amount changes in 2017 to $127,200.

The reason for the increase was an increase in average wages. Not only do workers not get taxed for earnings over this amount, it is not figured into benefits paid out upon retirement. This change will have a big impact as 12 million workers will be contributing more into the fund.

Higher Earnings Limit

Many retirees choose to work part-time even when they begin collecting Social Security. They have to stay under a certain earnings limit or have a portion of their benefits withheld. The limit will increase from $15,720 to $16,920 if they are age 65 and younger. For those over 65, their limits changed from $41,880 to $44,880.

If people exceed these amounts, they will have money withheld from their benefits. For those age 65 and younger, they lose out on $1 for every $2 earned over the limit. Those who are over this age, they will have $1 withheld for every $3 they earn.

Changes to Social Security Regarding Retirement Age

Starting in 2017, people who want to retire will have to work longer to receive full benefits. The retirement age for those born between 1943 and 1954 were eligible to retire at age 66 and receive their full benefits. Now, those who are born in 1955 will have to wait until they are age 66 and 2 months to retire.

The retirement age will continue to go up by two months for each year until reaching age 67. The reason is that life expectancy has increased. The goal is to delay payouts to compensate for the increase and ensure the benefits last for the life of the recipient.

These changes to social security will impact people in retirement as well as those who are thinking about retiring. It’s important to know about the new rules and regulations to help in planning for retirement.

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