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Caution Ahead: Changes to Social Security in 2016

Social security changesHere is how the rules changed in 2016 with regards to your Social Security benefits check and your paycheck deductions.

Let’s have a look at how Social Security will shape up this year; here’s the list:

No Bump. Social Security beneficiaries will not receive a cost-of-living adjustment (COLA) due to low inflation. This is the third time since 2010 that beneficiaries won't see a raise.

Your Average Monthly Social Security Benefit. The maximum monthly benefit for workers retiring at full retirement age is $2,639. The average monthly benefit for all retired workers is $1,341.

No More Claiming Strategies. Many folks in the past used some popular "file and suspend" claiming strategies. They let married couples claim larger Social Security benefits than Congress intended. These will be eliminated, but couples who are eligible now have until the end of April 2016 to enter into a claiming strategy before the loopholes are zipped up.

Medicare Premiums Go Up – for Some. Without a COLA, 70% of Medicare beneficiaries will not enjoy an increase in Medicare Part B premiums. The remaining 30% will see base premiums rise from $104.90 to $121.80 per month.

Disability Benefits Secured. The trust fund that pays disability benefits was about ready to run out of reserves in 2016, triggering a 20% cut for the nearly 11 million beneficiaries. However, over the next three years, more payroll tax money will be earmarked for that disability fund, so full benefits will be secure through 2022.

Reference: AARP (December 8, 2015) "Social Security Changes in 2016"

 

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