social security changes
October 26, 2016 | by Chris Stein, CFP®, Finance Instructor at Colorado State University
Social Security Changes for 2017

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The headlines recently have been focusing on the miniscule COLA (Cost of Living Adjustment) that the Social Security Administration has recently announced for 2017. In the coming year, SS recipients will experience the lowest non-zero COLA in history… just 0.3%. Since that news is being distributed far and wide, I wanted to point out many other Social Security changes that are coming in 2017.

Maximum Taxable Earnings

– increasing from $118,500 (2016) to $127,200 for 2017
This is the maximum amount of earnings that are subject to SS taxes each year. Any earnings above this amount are only subject to Medicare payroll taxes. This is the cap that is talked about frequently being raised or eliminated as an attempt to improve the solvency of Social Security.

Quarter of Coverage

– increasing from $1,260 (2016) to $1,300 in 2017
This is the amount of earnings needed to earn one quarter, or credit of coverage. You can earn no more than 4 credits per year and need 40 to be fully insured under the Social Security system, and thus become qualified for a retirement benefit. You can earn the $5,200 at any point in the year and still get all 4 credits. You do not have to earn $1,300 in each quarter of the year.

Earnings Test

– limit increasing from $15,720 (2016) to $16,920 in 2017
For those people claiming a retirement benefit prior to their full retirement age (FRA), their benefit will be reduced $1 for every $2 earned above this limit. So early retirees who still have some earned income can now earn $1,200 per year more without subjecting themselves to the earnings test.

Maximum Retirement Benefit

– increasing from $2,639/mo (2016) to $2,687/mo in 2017
This maximum represents the maximum benefit amount that can be achieved using the current benefit formula combined with the cap on earnings subject to SS taxes. Be aware that your actual benefit could actually be larger than this if you receive the benefit of delayed retirement credits by waiting until after your FRA to claim. So technically the largest benefit possible would be 32% higher than this, or $3,547 if you qualified at the maximum amount and waited to age 70 to claim.
Not all of these changes will affect everyone, but many people will see some effect as a result of these adjustments. Consider these things as the less headline worthy changes, but possibly impactful nonetheless.

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