Social Security: What’s Changing in 2016?
Whether you will soon be applying for Social Security, or are already receiving benefits, here’s what you need to know about what’s changing (and not changing) in 2016.
What’s Not Changing
No Cost-of-Living Increase: Because inflation was unchanged from the third quarter 2014 to the third quarter 2015, there will be no increase in benefit payments to current recipients in 2016.¹
Tax Cap Remains Unchanged: For workers, the cap on wages subject to Social Security withholding stays at $118,500.²
Earnings Limit: The amount that any Social Security recipient can receive in compensation without a reduction in his or her Social Security benefits remains unchanged from 2015 at $15,720 (under the full retirement age) and $41,880 (the year an individual reaches full retirement age).³
Medicare Part B Premium: Since the law prohibits Medicare premiums from rising faster than Social Security benefits, most retirees will see no increase in Part B premium costs. However, first-time enrollees in 2016 and high-income Medicare beneficiaries may pay a higher premium.
What’s Changing
Better Customer Service: Look for online services to expand, self-service kiosks at field offices to increase and reduced wait-times for a hearing decision.
Benefit Maximization Strategies: The file-and-suspend and restricted application strategies that worked to maximize the income benefits from Social Security have been eliminated, though the law does provide some grandfather protections.
Elimination of Revoking Suspended Benefits: Individuals who filed for benefits and then suspended them to gain a future, higher payout previously had the flexibility to “un-suspend” benefits in the event of a life-threatening illness or change in financial circumstances and receive a retroactive lump sum payment. This flexibility will no longer exist.
- Social Security Administration, 2016. The Social Security Act specifies that cost of living are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers.
- “Fact Sheet: 2016 Social Security Changes,” Social Security Administration
- “Fact Sheet: 2016 Social Security Changes,” Social Security Administration
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2016 FMG Suite.
Post by Phil Ratcliff
Phil Ratcliff, President of rebel Financial, is a senior financial advisor that holds an AIF®, CFP®, ChFC®, and CLU® certifications. He started his career at American Express Financial Advisors in 2003, then moved to AXA Advisors for 7 years before founding rebel Financial LLC in 2013.
