Social Security Unveils Four New Rules for 2017
Social Security is an important part of your retirement plan. But because it is an enormous, complicated government program, policymakers continually make adjustments to its rules and procedures. That’s why we always tell our clients that you can’t put your retirement plan on the back burner! As things change, so should your retirement plan. The following four changes to Social Security are set to take effect in 2017.
Payments will increase by a small amount. Beneficiaries count upon regular cost of living adjustments to help them keep up with the rising cost of living. And in most years, they do receive a bump in benefits. In 2017, that increase will be quite small compared to most years, due to our inflation rate remaining near zero. At 0.3 percent, the cost of living adjustment will result in an average of five dollars added to checks. These adjustments won’t always result in a lot of extra money, so remember that when you plan for retirement!
Married couples have fewer options. The loophole which allowed many married couples to utilize popular the file-and-suspend strategy has been closed. When it’s time to claim benefits, the lower-earning spouse can claim their own checks or spousal benefits, but they won’t be able to change to a different benefit type at a later date.
Working beneficiaries can earn a little more money before benefits are withheld. Some people choose to claim their Social Security benefits early, while continuing to work. But if they earn more than a certain limit (before reaching full retirement age), part of their benefits are withheld. Next year that limit will be raised from $15,720 to $16,920, allowing working Social Security recipients to earn a bit more money.
Some taxpayers will be paying more. Taxpayers support the Social Security program by paying a 6.2 percent tax on earnings up to $118,500. Next year, that earnings cap will increase to $127,200, meaning six-figure earners will be paying a bit more into the system.
As you can see, changes to Social Security can range from minor to significant, and they happen frequently. So you can’t just make a retirement plan and then forget it! Give us a call, and we’ll discuss Social Security planning as well as other elements of retirement preparation. We can double check your plan to see if it needs to be udpated, and help you make the necessary adjustments to your strategy.