Why Your Social Security Check is Going up in 2018

Why It Matters:

  • Each year at this time, Social Security announces whether there will be a cost-of-living increase.
  • This year’s 2% increase is the largest in several years.
  • Average retired worker to see about $27–per-month increase.

Greg Glasgow tkc.profilePicture Written by: Greg Glasgow | Transamerica
Oct. 31, 2017

5 Min readClock Icon

For the first time in five years, seniors will see a 2% cost-of-living adjustment (COLA) to their Social Security checks, about $27 a month for the average retired worker.

The 2% COLA will take effect in January 2018 for the more than 61 million Americans who receive Social Security benefits according to ssa.gov. It’s the largest adjustment since 2012, when the adjustment was 3.6%.

The average retired worker is expected to receive about $1,404 a month in 2018, according to the Social Security Administration (SSA). Couples who both receive benefits can on average expected $2,340 a month combined, the SSA said.

Social Security also increased the amount of wages subject to Social Security taxes from $127,200 to $128,400, about a 1% jump. The increase is dramatically less than the one announced in 2017, when the limit rose more than 7% from $118,500 to $127,200.

AARP, representing more than 38 million Americans over 50, released a statement warning even a 2% increase to Social Security benefits may not be enough.

“Today’s 2% COLA announcement gives some relief to Social Security beneficiaries and their families who depend on their earned, modest benefits,” the statement read. “For the tens of millions of families who depend on Social Security for all or most of their retirement income, this cost of living increase may not adequately cover expenses that rise faster than inflation, including prescription drug, utility, and housing costs.”

The nonprofit urged lawmakers to work together to protect Social Security benefits.

Another senior advocacy group, The Senior Citizens League (TSCL), was even less enthusiastic about the COLA, claiming the Medicare premium increase they expect will wipe out any increase in Social Security Benefits.

“For the third year in a row, millions of older Americans will once again see no increase in their net operating Social Security payments,” TSCL’s Social Security and Medicare Policy Analyst Mary Johnson said in a statement.

In an effort to keep benefits in line with inflation, Social Security payments are tied to increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers. TSCL is pushing to link COLAs to a different index, one that reflects the higher costs seniors pay for medical care and housing.

Other changes for 2018 include:

  • Workers claiming benefits before reaching their full retirement age (FRA) may earn up to $17,040 a year (up from $16,920 in 2017) before they surrender $1 in benefits for every $2 in earnings.
  • Workers who reach their FRA in 2018 may earn up to $45,360 (up from $44,880) before they surrender $1 in benefits for every $3 in earnings. (Workers may earn whatever they can without penalty after reaching their FRA).
  • The maximum monthly benefit at FRA rises from $2,687 to $2,788.
  • Social Security’s retirement estimator can help you calculate your anticipated retirement benefits. If you already receive Social Security benefits, you can estimate your benefits after the 2% COLA by multiplying the gross amount by 1.02.

Learn more about Social Security with Transamerica resources at Transamerica.com/SocialSecurity.

Neither Transamerica nor its agents or representatives may provide tax, investment or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors and financial professional regarding their particular situation and the concepts presented herein.

Things to Consider:

  • Social Security is a great benefit, but when a 2% cost-of-living adjustment is cause for celebration, it may remind you that it won’t provide for a luxurious retirement.
  • Another increase to the maximum earnings subject to Social Security taxes means high earners are facing a tax increase.
  • In retirement, Social Security benefits are in many cases subject to income tax.

This article has been updated to reflect a change in the maximum amount of earnings subject to Social Security tax, due to an adjusted figure issued by the Social Security Administration on November 27, 2017.



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