4 Changes Coming to Social Security This Year

For many people, the new year signals a time of fresh starts, resolutions, and reaching for new goals. But it’s also, quite simply, a new fiscal year. January 1 is often the starting point for many changes issued by the federal government, including changes within the Social Security system. In fact, we’re eyeing a few alterations in particular, which have already begun…

The cost of living adjustment has begun. In October, the Social Security Administration announced a cost of living adjustment (COLA) in the amount of 2 percent. That adjustment took effect on January 1, with beneficiaries receiving a slight “raise”. The average Social Security check for retirees now amounts to $1,404 per month.

The earnings limit on “early” beneficiaries was raised. If you claim Social Security benefits before your full retirement age, your checks can be reduced if you earn more than a certain limit each year. That limit has increased slightly, from $16,920 to $17,040 per year. Keep this earnings threshold in mind, if you’re thinking about filing for benefits before you reach your full retirement age.

The full retirement age is increasing. The age at which you can claim full benefits will vary from one person to the next, according to when you were born. Full retirement age has been set at 66 for some time now, but will gradually increase to age 67 for those born after 1960. If you were born between 1954 and 1960, your full retirement age is likely 66 and some months. Check with your Social Security representative or financial professional to be sure.

The taxable earnings cap was raised. All earnings are subject to Social Security taxes, up to a certain limit. That threshold was raised from $127,200 per year, to $128,700. That doesn’t sound like an enormous change, but it will mean a bit more money coming into the system.

On that note… Keep in mind that the Social Security system is not in great shape. By 2034, some funds will be exhausted, and the Administration will only be able to pay out about two thirds of scheduled benefits. This would be a terribly unpopular move, though, so we expect to see some major changes in coming years. Keep an eye on what’s happening with Social Security as you plan for retirement, and remember to consult with us regularly so that we can help you revise your financial strategy.