5 Expected Social Security Changes in 2018
There are few social programs in the United States that are more important than Social Security. Recent findings show that 62% of all elderly recipients get at least half of their monthly income from Social Security, and about a third overall get 90% or more of their monthly income from the program. Because of its importance for current (and future) retirees, each year there is an announcement from the SSA detailing the changes to the program in the following year; This announcement is often made in the third week of October. What can you expect in terms of Social Security changes for 2018? The following five Social Security changes appear very likely:
1. Seniors should be getting a modest raise
To start with, Social Security beneficiaries should expect to receive a modest raise in their payout beginning next year. It's not uncommon for recipients to get an annual raise, although no raise was divvied out in three of the past eight years. While it's unknown at this point what the magnitude of the raise, known as COLA, will be in 2018, it's currently trending closer to 2% than it was just two months ago.
2. The full retirement age will tick higher by two months
The one change that's guaranteed next year is yet another gradual increase to the full retirement age for those born in 1956.
In 1983, Congress and President Reagan passed the last sweeping overhaul to the Social Security program. Among the many changes implemented was a staggered increase to the full retirement age, or FRA. Your FRA is the age at which you become eligible to receive 100% of your benefits. For those born in 1956, your FRA is 66 years and four months, up from the 66 years and two months for those born in 1955.
3. The maximum taxable earnings cap should rise
There's also a very strong possibility that the maximum taxable earnings cap, which is tethered to the National Average Wage Index, is going to head higher in 2018. How much more? It's tough to say with any certainty, but [it's likely] the maximum taxable earnings cap up to a little more than $130,000.
4. You'll probably have to work harder to earn lifetime work credits
Despite the somewhat popular (and incorrect) belief that Social Security is an entitlement program, you have to work your way to benefits. In order to qualify for retired worker benefits, you'll have to earn 40 lifetime work credits. A maximum of four can be earned each year, with each credit have an earned income value attached to it. This year, for example, workers can earn a credit for each $1,300 in income. In other words, you can maximize your earned work credits for the year if you generate $5,200 in income. Nevertheless, working part-time for 10 years should, at minimum, allow you to qualify for retirement benefits.
5. The maximum monthly payment should adjust upward
Finally, there's a pretty good likelihood that the maximum monthly Social Security benefit at full retirement age is going to head higher in 2018. In 2017, the maximum monthly payment at FRA is $2,687, which was up $48 a month from 2016.
However, the maximum monthly payment isn't something too many folks have to worry about. Roughly 60% of retirees claim benefits before reaching age 65, which means a majority of retirees are receiving less than 100% of their full retirement benefit. What's more, a person would have to work a minimum of 35 years, and earn at least the maximum earnings cap amount in those years, in order to have a shot at the monthly maximum benefit.
Source and Full Artice: The Montly Fool