Whether you will soon be applying for Social Security, or are already receiving benefits, here’s what you need to know about what’s changed (and what hasn’t changed) in 2016.
What Hasn’t Changed
No Cost-of-Living Increase. Because inflation was unchanged from the third quarter 2014 to the third quarter 2015, no increase in benefit payments in 2016 and a .3% increase for current recipients in 2017.¹
Tax Cap Remains Unchanged. For workers, the cap on wages subject to Social Security withholding stays at $118,500.²
Earnings Limit. The amount that any Social Security recipient (who is under the full retirement age) can receive in compensation without a reduction in his or her Social Security benefits for 2017 is $16,920 (up from $15,720 for 2016) and $44,880 in the year an individual reaches full retirement age (up from $41,880 for 2016).³
Medicare Part B Premium. Since the law prohibits Medicare premiums from rising faster than Social Security benefits, most retirees will see no increase in Part B premium costs. However, first-time enrollees in 2017 and high-income Medicare beneficiaries may pay a higher premium.
Better Customer Service. Look for online services to expand, self-service kiosks at field offices to increase and reduced wait-times for a hearing decision.
Benefit Maximization Strategies. The file-and-suspend and restricted application strategies that worked to maximize the income benefits from Social Security have been eliminated, though the law does provide some grandfather protections.
Elimination of Revoking Suspended Benefits. Individuals who filed for benefits and then suspended them to gain a future, higher payout previously had the flexibility to “un-suspend” benefits in the event of a life-threatening illness or change in financial circumstances and receive a retroactive lump sum payment. This flexibility will no longer exist.
1. Social Security Administration, 2016. The Social Security Act specifies that cost of living adjustments are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers.
2. Fact Sheet: 2016 Social Security Changes, Social Security Administration
3. Fact Sheet: 2016 Social Security Changes, Social Security Administration
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2016 FMG Suite.