For most retirees, Social Security comprises an important part of retirement income. Naturally, you expect for that income to be stable and accessible when you decide it’s time to file for benefits. And for the most part, it will be. But since Social Security is such an enormous, complicated government program, the rules do tend to change over time. It’s important to stay updated on these changes, so that you know what to expect when it’s time to claim your benefits.
The following four changes will be implemented in 2017, and could affect you.
Payments will increase, but only by a small degree. Each year, the Social Security Administration announces a cost of living adjustment (COLA) for beneficiaries. Since COLA is based on the inflation rate, it can fluctuate from one year to the next, and very rarely there is no COLA at all. For 2017, benefits will be adjusted only a tiny amount, with the average beneficiary receiving an extra five dollars per month.
The maximum possible benefit will grow. For 2017, the maximum Social Security benefit (claimed at full retirement age) will increase by 48 dollars, to $2,687 per month. Keep in mind, though, that this is the maximum benefit, and is calculated based on your earnings history.
Married couples face different filing rules. Congress has now closed an old loophole, which allowed a lower-earning spouse to collect spousal benefits while still working, and then switch to a larger benefit based on their own work record. Now, married retirees will automatically receive the higher of their two available benefit amounts, and cannot change their claim at a later date.
Social Security will collect more tax revenue. Currently, workers support the Social Security system by paying 6.2 percent of their annual salaries into the system, up to a certain income cap. In 2017, that income cap will be raised from $118,500 to $127,200. This means about 12 million workers will be paying higher taxes, which will help to keep the program afloat.
Whether or not these changes affect you personally, the lesson to keep in mind is that Social Security rules can and do change over time. Don’t make any assumptions about your benefits, and work with a financial professional to continue planning your retirement income and budget throughout the years.