Social Security Administration announced last week that benefit payouts will increase by 2% for 2018, raising the average benefit by about $27 a month. This is the biggest bump in five years.
Social Security COLA History
January 2017 — 0.3%
January 2016 — 0.0%
January 2015 — 1.7%
January 2014 — 1.5%
January 2013 — 1.7%
January 2012 — 3.6%
January 2011 — 0.0%
January 2010 — 0.0%
Those still working while receiving Social Security benefits can earn a small amount more this year, with income limits increasing by $120/yr for those under FRA and by $480/yr for those reaching FRA in 2018.
Last year, the big Social Security news was not related benefits or income limits, but the change to the maximum earnings subject to Social Security taxation. The maximum taxable earnings changed from $118,500 to $127,200, amounting to a 7.34% increase. This was the largest one-year increase in the Social Security wage base in history. The large increase was because there was no COLA in 2016, and when there is no COLA, Federal law prevents any increase in the taxable earnings. The 7.3% wage base increase reflected two years of wage growth.
This year, the wage base increased 1.01%, from $127,200 to $128,700. Learn about the method for determining the wage base and see the calculation for 2018.
We have a handy cheat sheet including the important Social Security facts and figures for 2018 to share. The changes over 2017 amounts are included in green.
Stay tuned for the upcoming announcement of retirement plan limits by the IRS, which will be covered in a dedicated blog post.