Recently the Social Security Administration announced that there would be no Cost of Living Adjustment (COLA) to recipients’ benefits for 2016. This is the third time in 7 years that there has been no adjustment. In 2010 and 2011 we saw the first ever zero COLA years since the automatic adjustment was first put in place in 1972. That dark period of time actually resulted in two years in a row with zero COLAs, after 38 years of increasing adjustments. Why? The Cost of Living Adjustment (COLA) is based upon the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W. If this factor increases year-over-year, then a COLA can be applied to Social Security benefits. This is an automatic adjustment, no action is required of Congress to produce the increase when there is one. See How Social Security COLAs Are Calculated for details on the calculations. When […]
earnings limits
3 Do Over Options For Social Security Benefits
You’re allowed to file for your Social Security retirement benefits when you reach age 62 (in general). Most advisors recommend that you delay filing until some later date to better maximize your lifetime benefits. But what do those advisors know anyhow? At least that is what you were thinking when you first filed. After all, you’ve paid into the system for your entire working life, you deserve to get the money back out, right? Plus, who knows when Social Security will go bankrupt, right? Gotta get the money while you can! Then a couple of years pass and you realize that you short-changed yourself (and your spouse) by taking early benefits. Turns out that you didn’t need that money at 62 – you could have delayed. And you’ve come to realize that Social Security is not likely to go away, at least not in your lifetime. (Maybe those advisors were […]
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Social Security Figures Increase for 2014
Recently the Social Security Administration released the updated figures for 2014, including the wage base, earnings limits, and the increase to benefits. For 2014, the wage base for Social Security will rise to $117,000. This is the maximum amount of W2 wages that are subject to the 6.2% employer- and employee-paid Social Security tax. This amount represents an increase of $3,300 over the wage base of $113,700 in 2013. In addition to that increase, benefits to eligible recipients of Social Security retirement will increase by 1.5% in 2014. This is slightly less than the 1.7% increase to benefits in 2013. This brings the average monthly benefit for all retired workers up by $19, to$1,294 in 2014. For the average couple who are both receiving Social Security benefits, the COLA increase is $31 per month, for an average benefit of $2,111 in 2014. Likewise, there was an increase announced to the […]
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How Social Security Earnings Limits Impact Total Family Benefits
As we’ve discussed in the past, there are limits on the amount of earnings that a person can receive while also receiving Social Security benefits, if the person on whose record the benefits are being received is under Full Retirement Age. But those earnings limits don’t only impact the benefit of the primary receiver of benefits – anyone else who is also receiving benefits based on his or her record will also be impacted by the earnings limits. How Does This Work? As you know from the previous article, in 2012 if an individual is receiving wage income in excess of $14,640, for every $2 of earnings over that amount, benefits received are reduced by $1. If there is no one else receiving benefits on his or her record, the individual would lose benefits by $1 for each $2 over the limit. However, if someone else is receiving benefits on […]
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Increase Your Social Security Benefit After You’ve Filed: File and Suspend Doesn’t Have to Be All at Once
Note: with the passage of the Bipartisan Budget Act of 2015 into law, File & Suspend and Restricted Application have been effectively eliminated for anyone born in 1954 or later. If born before 1954 there are some options still available, but these are limited as well. Please see the article The Death of File & Suspend and Restricted Application for more details. We’ve discussed the File and Suspend activity many times on this blog, but most of the time we refer to the activity as happening all at the same time. This is because very often we’re talking about one spouse setting the table for the other spouse to begin receiving Spousal Benefits. There is another situation where File and Suspend could be used – you could earn delayed retirement credits after you had already started receiving your retirement benefits by suspending your benefit. You must be at least Full […]
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Working While Receiving Social Security
[Hank Gowdy, Dick Rudolph, Lefty Tyler, Joey Connolly, Oscar Dugey (baseball)] (LOC) (Photo credit: The Library of Congress) For many folks, starting to receive Social Security as early as possible is important – even if they’re still actively working and earning a living. Something happens when you do this though: depending on how much you’re earning, you will be giving up a portion of the Social Security benefit that you would otherwise receive. Up to the year that you will reach Full Retirement Age, for every two dollars that you earn over the annual limit ($14,640 for 2012, or $1,220 per month), your Social Security benefit will be reduced by one dollar. Then in the year you will reach Full Retirement Age (FRA) there is a different income limit – actually $3,240 per month. For every three dollars over that limit, your Social Security benefit will be reduced by one […]
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2012 Social Security Earnings Limits
For the Earnings Test, there is a limit to the amount of income that can be earned if you’re under Full Retirement Age (FRA). The limits for 2012 were recently released: For years in which the recipient of Social Security retirement benefits is younger than FRA, Social Security benefits will be reduced by $1 for every $2 greater than $14,640, or $1,220 per month. For the year in which the recipient reaches FRA (but prior to reaching FRA), Social Security retirement benefits will be reduced by $1 for every $3 over the limit of $38,880 or $3,240 per month. After reaching FRA, there is no limit on earnings.
Sterling Raskie, MSFS, CFP®, ChFC®
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