There is good news! Social Security payments will increase by 2% in 2018. The bad news? It's not enough to keep up with inflation.
Many senior citizens will be happy to learn that the amount of money they will receive in their social security checks will increase two percent in 2018. This averages about $27.38 per month, or $329 per year under a new Cost of Living Allowance (COLA). “It will help them make ends meet,” says Erin Parrish of AARP Minnesota, pointing to an example of how the modes increase may allow a person to purchase a month's worth of medication.
Unfortunately, this modest increase in benefits, the largest since 2012, still does not allow many seniors to keep up with the ever-rising costs of medical care. As the age of retirement has continued to rise, the Social Security Administration (SSA) has continued to warn that the present rate of depletion of social security funding will result in the fund being empty by 2034.
Other changes to social security in 2018 include a slightly higher tax cap. At present, Americans in the workforce who pay social security taxes give up 6.2% of their pay to Social Security if they make up to $127,200. That cap will slightly increase to $128,700 in 2018.
The SSA has announced that the maximum possible benefits that a person can receive increased from $2,687 per month to $2,788 per month, or $33,456 per year. Additionally, seniors who continue to work while receiving Social Security can earn up to $17,040 without being penalized. This is a modest increase from $16,920 in 2017. Likewise, disability payments will increase in 2018 by $10 per month.
One of the biggest changes to Social Security is that it no longer mails paper statements. Beneficiaries in 2018 are now required to have an online account at ssa.gov. This development may be quite irksome for senior citizens who are not tech-savvy. To make matters more complicated, the SSA will require two-step verification for security purposes which will likely require more than one pin or password to access an account. While security is always a concern, some seniors may wish to have a trustworthy friend or relative walk them through the procedure the first few times.
So, there are some modest increases coming to various aspects of social security benefits in 2018 that will be welcome for millions of Americans. What has long been “the bedrock of American financial security” will continue to be so for the short term but what happens after 2034? With the social security predicted to be depleted, what will our seniors do then?
The aging population needs to take steps today to ensure their financial security. Look at alternative means for future income such as safe investments and early planning. They should take these actions while they are still working. Go one step further and work with an elder law attorney to create a strategy that will help protect assets and allocate funds for long term care. It's crucial to plan as early as possible, contact our office today for an appointment.