Every fall, the Social Security Administration (SSA) announces its annual changes to the program, including benefit increases, qualification standards, and how much of your money the program can tax.
And we've compiled the most critical changes for you right here...
How Social Security Will Change in 2018
Social Security Change No. 1: Bigger Monthly Checks for Retirees
The cost-of-living adjustment (COLA) in recent years has been a complete joke. Last year's adjustment was a mere 0.3% - less than $5 extra each month for many retirees. The year before that?
Zilch.
The good news: This year's COLA is the highest in six years, at 2.0%. That's an extra $27 each month for the average Social Security beneficiary.
The bad news: The COLA is still based on the CPI-W, an inflation measure based on urban wage earners, not retirees. In fact, this year's 2% bump is due to bloated gas prices, which don't significantly affect the elderly. In short, the high COLA is essentially a fluke.
The worse news: Medicare might swallow the 2% raise. Medicare has kept many retirees' premiums artificially low due to the recent low COLAs. The increased COLA could mean a comparable increase in Medicare premiums that will cancel out the raise.
Social Security Change No. 2: The Rich Will Pay a Little More
The maximum amount of income that can be taxed for Social Security will increase by $1,500, from $127,200 to $128,700 - a 1.2% increase.
That means that for the roughly 12 million Americans who earn more than $128,700, they'll pay an extra $93 a year in taxes to the SSA.
We're sure they're really torn up about it.
Social Security Change No. 3: The Rich Will Receive a Lot More
The maximum possible Social Security payout for people retiring in 2018 (at the normal retirement age) has risen from $2,687 to $2,788 per month. That's a 3.8% increase - nearly double the COLA for this year.
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This is because the primary insurance amount - the amount the SSA pays you in your first year of retirement - is based on the money you've contributed to the program over time. And since maximum taxable income increased by over $8,000 in 2017, this year's wealthy retirees are seeing the benefits.
The final two changes affect every American, rich or poor. In fact, the next one shows why some Americans will have to work more hours next year to receive the same benefits...
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Social Security Change No. 4: It's Now More Costly to Qualify for Social Security
To receive any amount of Social Security retirement payments, you must earn 40 "credits." In 2017, you get one credit for every $1,300 you earn, and you can earn up to four credits a year.
In 2018, you need $1,320 for a credit - a 1.5% increase.
Because anybody worried about earning enough credits is almost certainly earning minimum wage - which won't increase in 2018 - this threshold hike amounts to 11 more hours of work a year.
Social Security Change No. 5: Earnings Thresholds Are Creeping Upward
Whether you're receiving Social Security in your retirement or due to disability, you can still earn income, up to a point. But the SSA establishes thresholds above which it starts to withhold benefits.
And those thresholds are on the rise, at a slightly lower rate than the average increase in wages.
Non-blind disabled people can now earn up to $1,180 a month at no detriment to their Social Security income. That's up $10 - or 0.9% - from last year.
Blind beneficiaries get a similar boost: At $1,970 a month, they enjoy a $20 (1%) increase.
Beneficiaries who are under the full retirement age (67 for anyone born in 1960 or later) can now earn $1,420 a month before some benefits start getting withheld, while those who will reach their full retirement age later in the year can earn up to $3,780 per month without affecting their benefits. Those represent increases of 0.7% and 1%, respectively.
Because the average increase in wages - 1.2% - is higher than any of the threshold increases, many workers who were at the threshold last year will find themselves above it this year.
As a result, these workers can expect a few dollars to go missing from their Social Security checks each month.
Stay One Step Ahead of the Social Security Administration
At the current rate, the Social Security Trust Fund will run dry in seven short years. If Congress doesn't get its act together, you'll find yourself missing 30% of your Social Security check.
You don't want to be caught flat-footed.
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