5 Changes Coming to Social Security in 2017

Social Security

5 Changes Coming to Social Security in 2017

Posted by RDW Financial Group
4 years ago | December 19, 2016

The world of retirement planning is always turning, things never staying exactly the same for long. Policy makers, economic conditions, and society in general all play a part in determining your future. Social Security, in particular, is a topic that continues to perplex many of us, because the complex rules and procedures regarding benefits seem to constantly change. As a matter of fact, five major alterations to the rules were recently unveiled, and will take effect in 2017.

Payments will increase… slightly. Each fall, the Social Security Administration announces plans for a cost of living adjustment (COLA) on benefits checks for the following year. This January, the COLA will be quite small – only 0.3 percent – but that’s because inflation remained nearly flat this year. The average Social Security beneficiary will receive an extra five dollars per month.

The maximum possible benefit is larger. The maximum monthly benefit will increase by 48 dollars to $2,687 next year. Of course, that amount represents the maximum benefit a retiree can claim at full retirement age. If he or she waits a few more years to file a claim, monthly payments can be even larger.

The cap on taxable earnings has been raised. Social Security benefits are funded by tax dollars coming into the system each year. Typically, workers pay 6.2 percent of their earnings toward Social Security taxes, up until a certain cap. In 2017, that cap will increase from $118,500 to $127,200. About 12 million workers will be paying higher taxes next year.

The rules for married couples have changed. In the past, the lower-earning spouse could collect spousal payments for a few years, continue working, and then switch to their own higher benefit amount later. Social Security no longer allows couples to go this route, because the loophole allowing it has been closed. Now, married retirees will automatically receive the higher of their two benefit amounts, and will not be able to make changes to their claims.

Your dependents cannot receive benefits if you suspend your own payment. This new rule actually took effect in April of this year, but many people still aren’t aware of it. At full retirement age, you might choose to suspend your Social Security payments in order to earn higher checks in the future. But if you choose this course of action, any dependents will not be able to receive payments during the suspension. An exception to this rule is provided for divorced spouses, who can receive spousal benefits if he or she is otherwise eligible for them.

If all of this sounds confusing, you aren’t alone. Social Security is a large, complex system, and many people struggle to keep up with changing guidelines. That’s why we focus on helping you plan for your Social Security benefits, and retirement in general. Give us a call, and we’ll be happy to answer any questions you might have about retirement.

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