While we continue to wait for Congress to act on tax reform, two pieces of next year’s financial planning puzzle have recently been revealed for retirees. In October, the Social Security Administration announced that 61 million Americans will receive a 2.0% increase in their monthly Social Security benefits beginning in January of 2018. The 2 percent increase in monthly income benefits is considerably bigger than the 0.3% increase Social Security recipients received in 2017.
The cost-of-living adjustment means that the estimated average Social Security benefit for retirees increases to $1,404 a month from $1,377 a month in 2017. Other changes for Social Security in 2018 include an increase in the amount of earnings subject to Social Security taxes for working age Americans, from $127,200 in 2017 to $128,400 in 2018.
The other piece of the planning puzzle for retirees is not as positive, however. Most retirees will see a 23% increase in their Medicare Part B premiums in 2018. The majority of retirees have seen modest increases in Medicare Part B premiums, which cover outpatient services and doctors’ bills, the past two years because of the “hold harmless” provision. The “hold harmless” provision prevents the annual increases in Medicare Part B premiums from exceeding the dollar amount of cost-of-living increases in Social Security benefits from one year to the next. Now retirees will see most, if not all, of their monthly Social Security benefit increases wiped out by the increase in Medicare Part B premiums.
Financial planning is a never-ending endeavor, with changes in the financial markets and economic environments occurring frequently, and revisions and adjustments to plans occurring just as often. Once Congress finalizes the new tax bill, and it is signed into law, additional adjustments to existing financial plans will need to be made. Bollin Wealth Management is committed to keep you informed of important changes as they occur. In the meantime, feel free to call our advisors at 419-878-3934 with any questions you may have concerning Social Security, Medicare, tax changes or any other financial matters.
Sources: Social Security Administration, InvestmentNews, Medicare.gov