New Social Security Rules on the Horizon

Whether you are currently retired or still a member of the workforce, there’s a good chance that part of your retirement income will come from Social Security benefits.  Since the Administration makes changes to the program on a regular basis, you can’t just make retirement plan and then forget about it. As you can see from the following four changes, set to take effect in 2017, it’s important to stay on top of the facts and make the necessary adjustments to your plan.

Married couples have fewer filing options. In the past, the file-and-suspend strategy helped many married couples to reap greater benefits from the Social Security system. But the loophole that once allowed that strategy has now been closed, meaning married couples have fewer filing options than before. You can now claim your spousal benefit or your own benefit (whichever is higher) but you can’t switch between benefit types.

Working beneficiaries can earn more money before benefits are withheld. Some of you might choose to claim your Social Security benefits early, while continuing to work. In the past, part of your benefits were withheld once you surpassed the earnings limit of $15,720. In 2017, that limit will be raised a bit, to $16,920.

Workers will be paying more Social Security taxes. Social Security benefits are funded by tax payers, who pay 6.2 percent of their earnings into the system. Annual income up to $118,500 was subject to this tax. Next year, that cap has been raised to $127,200, meaning additional tax revenue will be collected from six-figure earners.

Payments will increase. Each year, the Administration announces a cost of living adjustment for Social Security checks, unless the inflation rate remains at zero. This year, we saw very little inflation, so the adjustment is set at 0.3 percent. For the average recipient, this will amount to about five dollars. So, as you can see, you can’t count on those cost of living adjustments to provide steadily increasing income every year!

These are just some of the changes made to the Social Security system for next year. Depending on your individual retirement plan, there might be additional changes that you need to learn. So give us a call, and we’ll review your retirement plan with you.