Beneficiaries will receive a 0.3% Cost-of-Living Adjustment (COLA) beginning in January 2017.
Social Security beneficiaries can expect a small increase on their monthly payments beginning in January — good news after no Social Security COLA was issued in 2016.
But the bad news is at 0.3%, it is the lowest COLA increase issued in the history of Social Security. For most beneficiaries, this increase will amount to around $4 to $5 per month (an increase of about $1,355 to $1,360).
What this means for you: For the 70% of beneficiaries who have their Medicare Part B premium deducted from their Social Security checks, the “hold harmless” provision of the Social Security Act prevents their Part B premiums from climbing higher than the COLA. This means for most beneficiaries, Part B premiums will increase by about $4 per month. For the 30% of beneficiaries not covered, however, premiums are expected to increase by about $13, resulting in a net decrease in benefits.
Your maximum possible monthly benefit is set to increase by $48.
For a worker retiring at full retirement age (FRA), the maximum possible monthly payment will increase from $2,639 to $2,687 per month.
What this means for you: If you’ve earned a lot of money throughout your life and meet the requirements for receiving the maximum benefit, you can expect more money in your pocket. However, this increase amounts to around $32,200 per year — exceeding the non-taxable $25,000 individual limit and $32,000 limit for couples. This could mean a portion of your benefits would be subject to federal income tax.
Full retirement age increase takes effect for new retirees.
Beginning with those born in 1955, the FRA will increase two months (to 66 years and two months). After this initial increase, two-month increases will continue every year until the FRA reaches 67 for those born in 1960 or later.
What this means for you: Those 62 and younger waiting until they reach FRA to file for Social Security benefits will be affected by the retirement age increase.
Your earnings limit is increasing.
In 2016, retirees who worked and collected benefits before reaching FRA could earn a maximum of $15,720 per year before reaching the benefit withholding threshold. Workers earning more than this amount could have $1 in benefits withheld for every $2 earned in income above the limit. In 2017, this threshold increases to $16,920 per year. For those having reached FRA, a maximum of $44,880 may be earned before $1 in benefits is withheld for every $3 in income over the limit (unchanged from 2016).
What this means for you: If you currently or plan on supplementing your Social Security benefits with other income (and have not reached FRA), you will be able to earn $100 more per month before reaching your withholding threshold.
Married couples will no longer be able to double-claim.
Those turning 62 on January 2, 2016 or later will no longer be able to claim a spousal benefit before switching over to their higher delayed individual benefit at a later time.
What this means for you: Your Social Security benefit will default to the higher of the two options, either your spousal benefit or your individual benefit. You will not be able to claim both.