New Year, New President, Same Social Security Concerns.
Firstly, Happy New Year! I hope 2017 brings you great success. After a break over Christmas, it’s time to delve back into work. With the inauguration of a new president next week, there’s a lot of speculation about how Social Security will fare in the near future. Articles on Facebook have been extreme, with some predicting doomsday scenarios and others envisioning a golden era. While it’s unlikely that either extreme will materialize, it’s essential to sift through the noise and stay informed.
During the campaign, President-elect Trump stated he didn’t support Social Security changes at the moment. Whether you believe this or not, there will undoubtedly be some adjustments this year. Here’s what to expect:
– A modest Cost of Living Adjustment (COLA) of 0.3% for the upcoming year, offering a slight increase in benefits.
– Earnings test limits for individuals aged 62-66 will rise from $15,720 to $16,920, benefiting those who opt for early benefits and continue to work.
– The income subject to Social Security taxes will increase from $118,500 to $127,200, affecting high-net-worth individuals.
Proposed reforms include altering the age for full benefits, means testing, and recalculating benefit formulas. While these changes are up for debate, don’t expect immediate action. Instead, a commission might be formed, similar to the approach taken in the 1980s.
Adjusting the age for full retirement is a significant consideration. Representative Johnson has suggested moving it to 69, aligning it with mortality rates. Means testing, though complex, aims to redistribute benefits based on income levels. Cuts in benefits are also on the table, with proposals to eliminate or adjust the COLA formula.
Navigating these changes requires careful analysis and planning. Social Security education is crucial in retirement planning, and we’re here to help. Stay updated through our blog and newsletter, and don’t hesitate to reach out with any questions.
Thanks,
Steve Gaito, CFP®