Social: “of or relating to the life, welfare, and relations of human beings in a community:”
Security: “freedom from financial cares or from want:”
As you’ve probably already heard, Social Security beneficiaries won’t see any bigger payments in 2016. The reason is there wasn’t enough inflation in 2015 to trigger a cost-of-living adjustment to monthly benefits. (However, the Obama administration has issued a pay plan, setting an across-the-board increase for civilian federal employees of 1.3 percent in 2016). So much for the retired, hard working non-government individuals.
This is the third time there has been no Social Security payment increase since automatic cost-of-living adjustments began in 1975. As you recall, there were no increases in 2010 and 2011. In January 2015, the cost-of-living adjustment was 1.7 percent. Social Security payments are adjusted to keep up with inflation as measured by the Consumer Price Index for Urban Wage Earners, and Clerical Workers.
Here are six things to note, that this non-change has affected:
- No cost-of-living adjustments, means the maximum amount of earnings subject to the Social Security tax, stays the same. It will be $118,500 in 2016. Earnings above this amount are not subject to the Social Security portion of the payroll tax.
- The earnings limit will stay the same.If you draw a Social Security check and still earn a paycheck, you will be subject to the same limit as 2015. For example, if you are 65 or younger, you can make up to $15,720 in wages with no consequence. If, on the other hand, you go above this limit, the generous government will take $1 out of your monthly benefit check, for every $2 you earn above the limit. If you will turn 66 in 2016, your earnings limit leaps to $41,880. Any excess earnings above that amount will see a reduction in your benefit check of $1 for every $3. If you ascend to the glorious age of 66 in 2016, the clouds will part, and a booming voice will declare you free from any benefit payment reduction, no matter how much extra money you make. Also, all those $1 bills withheld, will magically begin to reappear on your benefit check.
- For some good news, if you are already receiving your Social Security check, when you enter into 2016, you will not be accosted with a Medicare premium increase.Your Medicare Part B premium will remain at the same level. Don’t mistake this flat rate as kindness from your government. This cap on Medicare increases is a federal law, which prohibits the government from increasing your Medicare Part B premiums faster than Social Security payments. Sadly, those unfortunate enough to sign up for Medicare Part B in 2016, and any high-income Medicare beneficiaries, will probably pay higher monthly premiums than the aforementioned beneficiaries.
- Another bummer for not being older sooner is the possible decline in benefits. Currently, the maximum Social Security payment for a 66-year-old retiree, who signs up for Social Security in 2016 will be $2,639 per month. That is down $24 (per month), from the maximum in 2015. According to a statement from the Social Security Administration, “A decrease in full maximum benefits occurs when there is no cost-of-living adjustment, but there is an increase in the national average wage index.” In other words, Big Brother likes to kick you when you’re down.
- The Social Security Administration is continuing to add to the services offered online. Workers can already create a My Social Security account that allows them to view their taxes paid and get a personalized estimate of their monthly payments at various claiming ages. Go to Sign in or Create an Account to get the process started. You can use this site to obtain a benefit verification letter, request a replacement SSA-1099 form or, most recently, obtain a replacement Medicare card.
- Before, your local Social Security office closed to the public at noon on Wednesdays so that employees can work to reduce backlogs. Now, you will have an hour longer to conduct business on most weekdays.
If you need help in maximizing your Social Security benefits, and other retirement income, Call or Text 501-223-8000 today.