Each year the Social Security Administration (SSA) publishes an annual fact sheet detailing changes to the Social Security program. The following changes will impact many working and retired Americans in 2018.

1) Full retirement age goes up – Americans who will turn 62 in 2018 (born in 1956) will need to wait until age 66 and four months to claim their full Social Security retirement benefit. That’s two months longer than those who turned 66 in 2017 and four months longer than older baby boomers born between 1943 and 1954 who have a full retirement age of 66. The full retirement age will continue to increase in two-month increments each year until it hits 67 for everyone born in 1960 or later.

2) Cost-of-living adjustment is highest in six years – The SSA announced a 2% cost-of-living adjustment (COLA) for beneficiaries, starting with the December 2017 payment. While this is the highest COLA in six years, it’s still historically low. Social Security COLAs have averaged roughly 3.8% since the current method was implemented in 1975.2

3) Higher payments for beneficiaries – The SSA estimates that the average retired worker will get a $27 a month raise to $1,404, and that the average couple receiving benefits will see their combined monthly payments rise by $46 to $2,340. However, for many retirees, this year’s increase could be consumed by rising Medicare Part B premiums. The highest possible benefit payable to a worker retiring at their full retirement age also rose by more than $100 to $2,788 per month in 2018.3

4) Taxable earnings cap rises – A maximum amount of wage income is subject to Social Security tax each year. For 2018, the maximum taxable earnings amount rose by $1,500 to $128,700, meaning that higher-income individuals may end up paying more in Social Security tax than they did in 2017.2

5) Disability thresholds rise – There are maximum amounts of income that people can still earn while collecting Social Security Disability Income (SSDI) benefits. These monthly thresholds rose slightly in 2018 and payments increased to $1,180 for eligible recipients and $1,970 for those who are legally blind.2

6) SSI payments increase – Monthly maximum amounts for Supplemental Security Income (SSI) payments increased 2% in 2018 to $750 for an eligible individual and $1,125 for an eligible individual with an eligible spouse.2

7) Earnings test exempt amounts go up – For beneficiaries who work while collecting Social Security, those younger than full retirement age can earn up to $17,040 in 2018 without being penalized. Above that level, you’ll lose $1 in benefits for every $2 earned. The earnings limit is $45,360 for those who will hit their full retirement age in 2018.4 It’s important to note that any benefits withheld while you continue to work are not “lost.” Once you reach full retirement age, your monthly benefit will be increased permanently to account for the months in which benefits were withheld.5

8) Social Security “credits” represent more earnings – To be eligible for Social Security retirement benefits you need to earn 40 Social Security credits, up to a maximum of four per year. In 2018, each credit represents $1,320 in earnings, so you’ll need to earn at least $5,280 to earn the four possible credits for the year.6
For more information on these and other Social Security program changes, visit www.ssa.gov.

If you have questions about how these changes may impact your income in retirement or need help with Social Security claiming strategies, contact the office today at 404-479-a 8341 to schedule time to talk.

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1 https://money.usnews.com/money/retirement/social-security/articles/2018-02-12/the-social-security-retirement-age-increases-in-2018
2 https://www.ssa.gov/news/press/factsheets/colafacts2018.pdf
3 https://www.fool.com/retirement/2017/12/31/8-changes-to-social-security-in-2018.aspx
4 https://www.aarp.org/retirement/social-security/info-2017/2018-social-security-changes-photo.html
5 https://www.ssa.gov/oact/cola/rtea.html
6 https://www.ssa.gov/pubs/EN-05-10072.pdf