The Social Security Administration recently announced that the 2018 Cost of Living Adjustment (COLA) will result in a 2% increase in Social Security benefits next year. The monthly benefits increase, which will begin in January, is significant because it is the largest COLA in six years and will impact more than 69 million Americans. It has been announced that the adjustment will apply to both Social Security and Supplemental Security Income recipients.
The increase in benefits will be accompanied by other adjustments affecting workers and retirees nationally. The Social Security payroll tax ceiling on earnings will be increased, resulting in more income being taxed annually. The earnings limit for workers younger than their full retirement age, which is age 66, rises to $17,040 from $16,920. For every $2 earned above that level, their benefits are cut $1. For those working recipients who turn 66 in 2018, the ceiling is set at $45,360, up from $44,880. Every $3 earned above that level reduces benefits by $1. Lastly, Medicare premiums will be more expensive in 2018, with exact hikes to be announced sometime later this year.
While the new COLA provides some additional funding (on average, $25 more each month), it will not be adequate for most retirees, as expenses for prescriptions drugs, utility, and housing costs rise faster than inflation. Your retirement plan is very important to us and we want you to be fully informed as to how these changes may affect your benefits and long term planning. Please do not hesitate to call us at (814) 536-1040 to set up a meeting to review your financial goals and beneficiary reviews.