The Social Security Administration has just announced a 2% COLA (Cost of Living Adjustment) beginning in January 2018 for those receiving SS checks. This is the largest increase since 2012 (only 0.3% for 2017 and none for 2016). The “average” SS check amount will rise about $27 per month and of course larger checks will be increased even more.
However, what remains to be seen is how big the Medicare Part B premium increase will be for 2018. Any premium increase will partially or completely offset the announced COLA. Some folks, with a smaller SS benefit may see little or no increase in their SS monthly checks – depending upon how big any increase in Part B premiums might be. For most SS recipients the Medicare Part B premium was $134/month in 2017 (higher income folks pay up to nearly 4 times as much each month). Yes it’s true, despite the announced COLA, some people will see no or a little increase in their monthly check in January — depending upon the Part B increase.
However, for those already getting monthly SS checks, no matter how big any premium increase in Medicare Part B is, the monthly SS check will never drop. The worst that can happen, by law, is that your SS check remains the same.
Federal retirees probably also know by now that their pension COLA (both CSRS and FERS) is also 2% for 2018.
There are a few other retirement changes that go into effect in 2018. The limit for 401(k), TSP and 403(b) contributions will rise to $18,500 (the $6,000 catch-up for those aged 50 remains the same). That change is predicated on Congress not changing the contribution limits as part of some new income tax laws that are being discussed now.
The taxable wages for Social Security and Medicare (FICA) goes up to $128,700 in 2018 (from $127,200 in 2017). That will mean about 12 million Americans will have more payroll taxes deducted from their paycheck. And as before, high earners will pay an additional 0.9% tax on all earned income above $200,000 for single filers and $250,000 for joint filers – with no income limits.
Also the “earnings test” for folks still working while getting early Social Security benefits (pre-FRA – Full Retirement Age) has been raised to $17,040 in 2018 vs. $16,920 in 2017. Earnings (from working) above those amounts causes $1 of SS benefits to be lost for every $2 earned above those earning amounts. Although the benefits aren’t really lost forever, they will be made up to you eventually – your SS checks will be adjusted accordingly.
all the best… Mark