A lot of people assume that Social Security is basically the same every single year. That’s true in some ways.
However, there are also things that change. Here are five examples for 2017 …
Social Security Change #1: (Slightly) higher payments.
Social Security recipients get cost-of-living-increases that are tied to the Consumer Price Index. Well, usually they get COLAs. Last year, they didn’t. And they were also stiffed in 2010 and 2011, too.
For this year, the COLA was a relatively meager 0.3%. That brought the average benefit check for all retired workers from $1,355 to $1,360 this month.
Yeah, five bucks. Contain your joy, recipients!
If you’re filing this year at a full retirement age of 66, the most you can receive has also gone up by $48 to $2,687. And if you delay — or previously delayed — taking benefits, the number could be higher still.
Social Security Change #2: More of your money subject to payroll taxes.
As you probably know, workers contribute 12.4% of their earnings to Social Security every year — an amount that is split between employers and employees — up to a certain annual cap.
Last year, the cap was $118,500. This year, it goes up roughly 7.17% to $127,000.
A lot of Americans — about 12 million, in fact — will be affected … paying in as much as an extra $1,054 this year.
And note the huge difference between the cost-of-living adjustment and the earnings cap adjustment!
Social Security Change #3: A higher earnings limit for retirees who keep working.
If you work and collect Social Security before your full retirement age, you may have some of your benefits withheld. This depends on how much you earn.
Last year, recipients under full retirement age could earn $15,720 before getting hit. This year, it’s $16,920. One dollar in benefits will be withheld for every $2 in earnings above the limit.
If you reach full retirement age this year, you’ll have $1 in benefits withheld for every $3 you earn above the limit of $44,880. In 2016, the number was $41,880. Beginning the month that you attain full retirement age, there is no more withholding at all.
Social Security Change #4: No more payments to dependents if you suspend yours.
Okay, technically this started last year … on April 30. But if you ask Social Security to suspend your payments so that your future checks go up, any other family members receiving benefits on your work record will also see their payments stop as well.
The exception to this rule? Divorced spouses can continue receiving their checks even if the ex suspends. I suppose this is to prevent spiteful benefit blocking.
Social Security Change #5: Goodbye, favorite claiming strategy!
One of my favorite strategies — and one I recommended to my own parents as well as hundreds of thousands of readers in dual-earner households — was collecting spousal benefit payments (worth one half of the spouse’s check) and then later stepping up to (a now-much-higher) benefit based on your own work record.
Unfortunately, if you turn 62 at any point this year, or already did so since Jan. 2, this is no longer possible. Social Security will automatically give you the higher of your two benefit options.
For more details on these changes, and other adjustments happening in 2017, check out this page from the Social Security Administration.