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Social Security Changes to Expect in 2018
One of the most significant civil programs in U.S. history, Social Security accounts for a major portion of every retiree's budget. Almost a third of all older Americans rely on the program for 90% of their monthly income. If you are one of those who relies on benefits or expects to rely on benefits, here are some changes for 2018.
The FRA will climb by two months. The FRA or Full Retirement Age is the point at which you can retire and receive 100% of your benefits. For those born in 1956, the FRA will be 66 years and 4 months. Last year, the FRA for those born in 1955 was 66 years and 2 months. This two month marker is important. Say you were born in 1956 and you decide to retire on your 66th birthday. That means you would qualify for only 97.8% of your full benefit. This might mean a $30 reduction in monthly payments. That adds up to $360 per year and a possible $7,000 less in a lifetime.
Social Security recipients should see a 2% cost-of-living adjustment. Not every beneficiary can anticipate a bonus in their 2018 checks. For those protected by Medicare's hold harmless clause and who have Part B premiums deducted from their benefits, they will see the cost of Part B rise to meet and cancel out the COLA.
If you reach your full retirement age in 2018 and want to receive Social Security, you may be happy to hear that maximum possible benefits have increased from $2,687 per month to $2,788 per month.
The limit on maximum taxable earnings will rise from $127,200 to $128,700. According to the Social Security Administration, approximately 12 million people will be paying more into the system. If a worker exceeds the cap, those earnings will not be taxed or applied to retirement benefits.
If you decide to work after retirement in 2018, you should be able to earn more before your benefits are affected. If you are younger than your full retirement age, the cap is $17,040. Earn more and you will lose one benefit dollar for every two gained. If you are at your full retirement age in 2018, the top grows to $45,360. The penalty will shrink to one benefit dollar for every three earned over the limit.
The Social Security Administration has stepped into the digital age. Paper statements will no longer be mailed to anyone under the age of 60. Should you wish to check earnings or take a peek at possible future benefits, you must set up an online account. The SSA has added security features and two-step verification to its website to thwart hackers.
Although Social Security benefits remain a major factor in a retiree's budget, the gap between the average yearly household payment (about $32,000) and the yearly income needed for a comfortable retirement (about $50,000) continues to widen. If you are considering retirement in 2018, it may be best to look elsewhere for supplemental moneys.
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