Mary Tom, Partner, Hunziker, Jones & Sweeney, P.A., says the upcoming increase in benefits for Social Security recipients might not be enough for recipients who live in New York and New Jersey – where the cost of living is very high – and the rise in the age of eligibility might hurt older recipients.
On October 13, the U.S. Social Security Administration (SSA) announced that those who are currently collecting Social Security Disability (SSD) benefits and Supplemental Security Income (SSI) will receive a 2% cost-of-living adjustment (COLA) increase starting in January 2018. For the average retired worker, that means a weekly increase of about $27, or a $329 increase annually. According to the agency, more than 66 million SSD and SSI beneficiaries will receive the COLA increase in 2018. Over 61 million SSD beneficiaries will receive the COLA increase in January 2018. The 8 million Americans who receive SSI will see the increase come earlier, on December 29, 2017.
However, the taxable maximum – the largest amount in a worker’s paycheck that will be deducted for Social Security – will increase from $127,200 to $128,700. That means 12 million out of the 175 million workers in the U.S. will pay more in Social Security taxes. In addition, starting next year, the full retirement age will go up by two months, from 66 years and two months to 66 years and four months. That is the age at which they receive the full payout of their Social Security benefits.
Under the Social Security Act, the amount of the increase depends on the increase in the Consumer Price Index, which is determined by the U.S. Labor Department’s Bureau of Labor Statistics.
The increase in benefits sounds like good news for the retirees, but for those who live in high-tax states such as New York and New Jersey, that might not be enough, Ms. Tom says.
Raising the minimum age will also hurt those who are looking to collect their full payout. Two months does not sound like a long time, but when you have to wait longer to collect money that you need, it can seem like an eternity.
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